How Louisiana Turned Disaster Into Dollars
By: Eve Troeh | Politico | 10/29/2016
As Hurricane Matthew spun toward Florida and the Carolinas this month, people in the storm’s path boarded up, evacuated, and waited for disaster to hit. But even before the death toll had been officially tallied, New Orleans attorney Jeffrey Thomas was already thinking ahead to the painful aftermath.
“Here we go again,” he thought, “yet another batch of devastated, exhausted state officials who will have to go begging on Capitol Hill for recovery money.”
Thomas had a pretty clear idea of what they would face. In 2005, he had worked for the City of New Orleans right after Hurricane Katrina. He had done the dance that officials must do for Congress to get the millions or even billions needed to rebuild after destructive storms. In some ways he had helped invent the dance steps.
In the years since that devastating storm, Thomas has parlayed his expertise in disaster recovery into a national practice advising local government and private entities on how to rebuild with federal recovery money. He’s just one of many academics, policy wonks, engineers and government and business consultants to leverage the state’s vulnerability to storms into a revenue stream, a cottage industry of disaster contractors that has emerged over the past decade. It’s an industry that makes some queasy— making money off of others’ misery is no one’s idea of a cheery business model—but the hope is to brand Louisiana as a hub of expertise, and help local companies and individuals grow their disaster experience into a business. Given that the biggest threat to the area comes from water—whether that’s flooding, heavy rain and storms or saltwater encroaching from the Gulf of Mexico—much of the growth is expected to come in an emerging “water management” sector that could yield more than 13,000 jobs over the next 10 years.
It’s already been a busy year for Louisiana’s home-grown disaster veterans.
After devastating floods around Baton Rouge and Lafayette in August, Louisiana squeaked through an initial round of $437.8 million from Congress as a “down payment” on rebuilding. State officials just renewed their request to the Obama Administration, upping the request from $2.8 billion to $4 billion for an overall recovery package. It was the cumulative experience of four hurricanes and the 2010 BP oil spill that, Thomas says, sped the state’s request for funding from Congress. Almost any official knows somebody – or knows somebody who knows somebody – who can tell them what forms and processes to prioritize. That explains how Denham Springs, a community near Baton Rouge where about 90 percent of homes flooded, had a draft of its own $30 million dollar recovery plan even before debris had been cleared from all its roads. Officials calculated that number from the estimated gap between individual and business insurance coverage and what it would cost to rebuild.
Now, as emergency officials mark the fourth anniversary of Hurricane Sandy’s landfall in New York, disaster industry experts are reminded that demand for their services is only likely to increase along with an expected rise in declared federal disasters due to climate change. A 2013 report from the Intergovernmental Panel on Climate Change expects major storms across the globe to last longer and rain down harder. And, of course, cost more. Each federally declared disaster—defined by the 1988 Stafford Act as anything “of such severity and magnitude that effective response is beyond the capabilities of the State and the affected local governments and that Federal assistance is necessary”—pretty much drains the Federal Emergency Management Agency’s meager Disaster Relief Fund, and then Congress steps in with a big Band-Aid.
A Center for American Progress study found that Congress approved at least $136 billion in disaster relief from 2011 to 2013 alone. And that’s an “at least” because there’s no system to track all the money that goes through agencies like FEMA, Housing and Urban Development, the Small Business Administration or even IRS for each disaster. Disasters are still treated as isolated events, requiring special appropriations, and custom-designed programs to finance the recovery and distribute funds. And it’s that combination of complexity and frequency that guarantees people like Jeffrey Thomas won’t run out of work soon. He’s not ready to put “Disaster Lawyer” on his business card, but he has an inch-thick stack of HUD waivers and a seven-foot-long flow chart on how to use Community Development Block Grant money at the ready. He has not yet reached out to communities affected by Matthew, but he has worked in Kansas, New Jersey and Long Island, N.Y., on disaster recovery over the past four years.
There’s also growing demand for thinking on the preventative side. Thomas has helped several towns and states apply for a billion-dollar national disaster resilience competition. He’d like to get leaders at every level to re-think how and where they rebuild.
The conversation should go beyond recovery, he says, “to help communities ponder the future.”
After Katrina, Louisiana officials discovered there was plenty of money to help them rebuild. They just couldn’t use it. That’s when Thomas, a policy advisor for the New Orleans Office of Recovery and Development, got creative.
New Orleans had received $411 million in Community Development Block Grants from HUD, but city officials were handcuffed over how to put it to work. That’s in part because CDBG money is a tool created in the 1970s for urban revitalization – not disaster recovery.
Thomas had an idea to devote some of the money for streetscape improvements along Freret Street, a devastated commercial corridor. “The idea was to incentivize redevelopment by adding benches and lights and trees and get people to buy those blighted properties and put retail back in there,” he says. But it didn’t fill an urgent need for housing, didn’t serve exclusively low- or moderate-income people, and it wasn’t a slum, so the fit for using HUD money wasn’t great.
So Thomas came up with a solution: His office got the entire city of New Orleans designated as a “blight zone.” That freed up money for Freret Street, but ultimately it enabled smoother redevelopment across the city.
It had took the better part of seven years, but New Orleans’ economy bounced back. The city weathered the Great Recession better than most, thanks in large part to the steady influx of federal recovery funds that were at last flowing. Many of its neighborhoods and post-flood initiatives emerged as success stories.
But those triumphs bloomed in the shadow of New Orleans’ continued vulnerability. With an increase in bad storms expected, compounded with sea level rise, and the fact that the river delta land under the city is sinking, New Orleans’ continued existence into the next century is not a given.
For Greater New Orleans Inc., tasked with developing the region’s economy, these threats had to be addressed. Robin Barnes, Chief Operating Officer of Greater New Orleans Inc., an economic development corporation, says framing disaster as opportunity for change gives “confidence to people moving here that not only are we creating a much safer place, but we are helping others become safer.”
The relevance of New Orleans’s hard-earned experience became strikingly clear in the fall of 2012 after Hurricane Sandy hammered the northeast. GNO Inc. was well-positioned to serve as a sort of matchmaker for Louisiana firms and communities looking for help recovering from Sandy’s ravages. “Before Sandy, it was just us,” says Barnes. Sandy proved to the nation that nowhere is immune to a Katrina-like disaster because, she says, “it’s everywhere.”
In New Jersey, Thomas, the former New Orleans policy advisor, helped structure a government buy-out of flood prone homes. The area became part of a local park system. After Katrina, he’d watched the political bungling and lack of community trust make buy-out programs like that impossible. Thomas notes that Louisiana disaster experts arrive not only with success stories, but important failures, too.
The Data Center says Louisiana firms won at least $225 million in federal and regional Hurricane Sandy contracts, from 2012 to 2014.. Of the billions in Sandy recovery dollars, it’s not a huge share, but the contracts represent significant growth for Louisiana firms that were nonexistent or employed just a few people before Katrina.
Dwayne Bernal started his New Orleans company, Royal Engineers, right before Katrina hit. The West Point grad landed post-storm contracts to assess damage for New Orleans’ Sewerage and Water Board. He expanded into more areas of civil engineering, construction project management, and environmental compliance and took those skills to set up shop in Newark, New Jersey after Sandy. The company has grown from a handful of employees to more than 60, focused on infrastructure projects around southeastern Louisiana, like road restoration in coastal St. Bernard Parish to shoreline protection in other coastal communities. Louisiana companies have also taken the knocks that come with disaster recovery. A few years after Katrina, Louisiana’s Hammerman & Gainer International took over administration of the state’s beleaguered Road Home program, the main public financing tool for homeowners to rebuild. HGI had been a subcontractor on Road Home for multinational corporation ICF – a company that started as Inner City Fund in 1969 for urban redevelopment in Washington D.C.
On the strength of its Road Home credentials, HGI won a $68 million post-Sandy contract in New Jersey to set up and manage staffed assistance centers, a website and a call center for homeowners who needed help. Sandy caused damage to about 200,000 homes in New York and New Jersey. The Christie administration abruptly and controversially terminated its contract with HGI after just nine months. Homeowners and legislators had criticized Sandy recovery as too slow. A nasty dispute followed, with the company keeping more than $35 million it had already spent plus another $7.6 million from New Jersey. (Now, in another nasty turn, HUD is demanding New Jersey repay the federal agency the $43.1 million it lost to HGI, or prove that HGI used the money appropriately.) And whom did New Jersey hire to replace HGI? None other than ICF, the company that botched the start of Road Home program in Louisiana.
It’s a complicated and uncomfortable business, cleaning up gargantuan messes and trying to make people whole after tragedy strikes. Serious competitors must get past any “ick” factor, as Barnes calls it, about profiting from disaster.
GNO Inc. has been helping to re-brand the disaster recovery industry by incorporating the less predatory-sounding and more forward-looking idea of preparedness. This year GNO Inc. relaunched an event previously called the International Disaster Conference and Expo with a new name: RES/CON. That’s “Res,” as in resilience, that urban policy buzzword of the moment. It brought several hundred experts to New Orleans around topics like water, insurance, humanitarian aid and emergency response. One panel focused on youth involvement in resilience, with New Orleans’ Vietnamese American Young Leaders Association, or VAYLA, in conversation with Ready Asia-Pacific, a disaster and resilience-focused NGO. Ready’s Akiko Otani detailed government partnerships and official curricula to involve young people in disaster planning.
Barnes says the event succeeded in moving disaster conversation beyond the realm of emergency managers and contractors, and into the realm of urban planners, social entrepreneurs and resilience scholars. It also positioned Louisiana as a center for this thinking, and got its local experts in front of a national and global audience.
This emerging sector is defined by more than the straightforward ability to pull off the logistics or infrastructure of disaster planning and recovery, Barnes says. It’s the understanding of how to complete projects under the very specific regulations that come attached to federal disaster recovery funds that counts. “You can’t have enough resident experts on that process,” says Jeffrey Thomas. And those experts are needed for the years that it takes to complete the recovery, he says.
Whatever you want to call it, a resilience or a disaster industry brings together elements of government and business that can feel awkward to reconcile.
Robert Collins a professor of Urban Studies and Public Policy at New Orleans’ Dillard University who has long studied land use and hurricanes, says disaster recovery goes by a different name in the private sector: business continuity. “They avoid the word ‘disaster’ because they don’t feel comfortable with its connotation.
Louisiana has honed its business continuity expertise over decades of dealing with the state’s biggest industry: offshore oil and gas drilling. These are the teams that inspect rigs or other industrial properties, then recommend improvements, design accident response systems and train employees in protocol. Many consultants who offer full-service industrial disaster or risk assessment services start in government, Collins says. But unlike very public natural disasters, it’s the job of private disaster response teams to stay out of the news. “If they’re doing their job well, no one hears about it,” he says. “They handle things so they don’t become bigger problems.”
On the academic side, Collins sees growth for southern Louisiana as a place people come to learn about any topics of urban planning or industry that happen near water.
Working with GNO Inc., Dillard is one of many local universities developing interdisciplinary and certificate programs in things like Coastal Engineering and Urban Water Management. New Orleans recently hired a City Water Manager. A local architecture firm, Waggoner and Ball, completed a Greater New Orleans Urban Water Plan that incorporates many more ways to “live with water” by building canals, retention pools and an extensive network of rain gardens. And a pilot project funded by the Rockefeller Foundation aims to show how the New Orleans neighborhood of Gentilly can incorporate some of these ideas, to better withstand heavy rains and storms ahead.
“People will come here from all over to study this,” says Collins.
But for many in this burgeoning industry, the usefulness of the expertise to other communities is outweighed to some degree by the urgency to solve existential threats closer to home. And that does not come with a price tag. Robin Barnes at GNO Inc. frames it as an existential issue. Louisiana is fighting to save its land from encroaching seas and storms, and sustain its population and economy.
“To the extent that you can build an industry around that,” she says, “you have something new, that no one else has put a specific value on.”
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