Hailing it as the “last major piece” of the federal funding puzzle for New Orleans’ post-Hurricane Katrina reconstruction, Mayor Mitch Landrieu on Thursday announced a massive $2 billion settlement with FEMA to fix the city’s deteriorating interior streets and the leaking sewer, water and drainage lines that run beneath them.
Interior streets are neighborhood streets that run between major thoroughfares.
The windfall is expected to set off a massive construction effort that could last at least a decade and finally begin to answer the outcry from residents about the often abysmal condition of their streets.
Combined with money generated by higher sewer and water fees, the FEMA cash will allow the city to tackle about a third of the estimated $9.3 billion backlog of work needed to completely overhaul the city’s expansive labyrinth of roads and underground pipes.
Landrieu hailed the settlement as a historic agreement that represents “the largest infrastructure improvement effort in our city’s history.”
“With today’s announcement, we have now made a major down payment toward fixing our infrastructure involving our interior streets,” he said, flanked by state, local and federal officials at a news conference at the Sewerage & Water Board office.
The settlement caps years of negotiations and was prodded forward by a 2012 law passed by Congress after Hurricane Sandy that allows the Federal Emergency Management Agency to negotiate lump-sum payments for post-storm reconstruction projects, sidestepping the thorny task of figuring out how much of the damage to facilities was caused by the storm and therefore how much the federal government will pay for each specific project.
The settlement will provide $1.25 billion beyond the $784.9 million that already has been hashed out between FEMA and the city on subsurface infrastructure improvements. Of the new money, $1.1 billion will go to the city for disaster-eligible road and drainage repairs, while $129 million will go to the Sewerage & Water Board for water, sewer and drainage repairs.
The city already has secured about $1 billion from other sources — primarily a projected $750 million from increased sewer and water fees — that, along with Thursday’s settlement, will create the $3 billion down payment to which Landrieu referred.
The administration didn’t provide details on how the money will be spent or a list of projects and the order in which they will be tackled.
Landrieu said only that the decision-making process will have to be thoughtful and will be done in conjunction with the city’s newly created Fix My Streets task force, which is charged with identifying long-term funding sources to tackle the city’s street and drainage problems in the coming decades.
The settlement is even larger than the similar $1.8 billion settlement negotiated in 2010 to rebuild the city’s schools.
Landrieu said that while there are still a few other outstanding issues to negotiate, it is “the last big tranche” of reconstruction settlement money from the federal government.
Staff members from FEMA, Landrieu’s office and the Governor’s Office of Homeland Security and Emergency Preparedness have met more than 800 times in recent years on the issue.
FEMA Administrator Craig Fugate said a major reason the negotiations took so long is that it was no easy task to estimate how much of the damage to the city’s streets and drainage was due to Katrina and how much occurred before the storm.
Having to continue making those determinations on every project “could have added years to the recovery,” he said.
Fugate said the Obama administration considers it a priority that the recovery effort helps address unemployment and underemployment, particularly among the city’s youth. He said the funding represents a major boost to the city’s economy and workforce.
“This will be a large public works project, and not only is it going to be about fixing the roads, it’s going to be about putting New Orleans back to work,” he said.
“What you are about to see here is generational,” Cedric Grant, executive director of the Sewerage & Water Board, said. “We will be able to do more work over the next half-dozen years than we’ve done in a generation. We’ll put more people to work than we’ve been able to put to work before, and we’ll produce a better product for the people of New Orleans and their quality of life.”
Follow Chad Calder on Twitter, @Chad_Calder.