Officials Add $6 Billion to Cost of Rebulding New Orleans

• From the Los Angeles Times on  March 31, 2006 [more]
  
• By Ralph Vartabedian

In what could be a significant setback to rebuilding New Orleans, federal officials said Thursday that it would cost an additional $6 billion to make the levee system strong enough that flood insurance could be issued in the area.

That amount would be in addition to the $3.5 billion already being spent to repair the levees damaged by Hurricane Katrina.

Without federally issued flood insurance, rebuilding could not proceed in many areas.

The new assessment was disclosed Thursday by Donald E. Powell, the federal coordinator for Gulf Coast rebuilding.

The problem evolved in recent weeks when disparate federal agencies began grappling with complex rules and regulations that affect federal flood insurance, the technology of predicting hurricanes and certifications of levee safety standards.

As a result, Powell found himself this week having to disclose to senior Bush administration officials and congressional leaders that what looked like a price tag of $3.5 billion to upgrade and repair levees in and around New Orleans had exploded almost threefold, to $9 billion.

"It is complicated, it is complex," Powell said in an interview.

The complication began as part of an effort by the Federal Emergency Management Agency to update 90,000 flood maps across the nation, which show where individuals and businesses can locate developments that would be unlikely to flood in 100 years and thereby qualify for the National Flood Insurance Program.

The flood maps that apply to New Orleans changed dramatically after Katrina, requiring a higher degree of protection from levees. Recent scientific research showed that the area had undergone a tremendous geologic subsidence, lowering the area's elevation. Climatic changes also might increase the risk of hurricanes.

As FEMA completed an early version of its flood maps, it went to the Army Corps of Engineers and asked it to certify that its levees would protect the city against the 100-year flood that FEMA had projected.

But in a surprise move, the corps said it could not certify that its levees would hold against a 100-year flood, and it refused to offer the certification.

 If the corps cannot certify the levees under FEMA rules, then in terms of flood insurance it would be as if New Orleans had no levees at all, federal officials said. The corps estimated that it would cost as much as $6 billion to make upgrades that would allow for the certification.

Maj. Gen. Don T. Riley, the corps' chief for public works, said in an interview that certifications sought by FEMA would require "significantly higher" levees than the current 12- to 17-foot storm walls and earthen mounds that surround the city.

Even if the corps built such a system, it would not protect against another Katrina, which Riley estimated was a 150-year storm. Moreover, the demand by Louisiana officials for levees that could protect against a Category 5 hurricane, the worst possible storm, would require an even larger-scale system that is the subject of a $20 million study, Riley said.

The immediate crisis of how to come up with $6 billion is under sharp debate.

One option would be to abandon certain sections of the region, such as Plaquemines and St. Bernard parishes or the Lower 9th Ward, which are driving a significant part of the costs. Central New Orleans would not require any significant additional spending, though the city's West Bank, its eastern flank and Jefferson Parish would require high spending to protect.

Under federal rules, local and state agencies must put up 35% of the cost of levee improvements. So far, the federal government has waived that requirement.

But as costs continue to mount, congressional leaders are becoming hesitant to do so.

Powell said in a news conference Thursday that he hoped rebuilding some sections of the city would take five years but that he could not rule out a reconstruction period of 25 years, noting Katrina was the greatest natural disaster in the nation's history.