New Orleans is taking federal taxpayers for a $2 billion ride in Hurricane Katrina spending, the inspector general who oversees the Federal Emergency Management Agency said Thursday, concluding that the city is charging the government for repairs that had nothing to do with the 2005 hurricane and flooding that devastated the Gulf Coast.
Auditors said New Orleans and FEMA struck a deal in 2015 to pay for sewage, water and street upgrades to a system that was already struggling before Hurricane Katrina, and whose repairs should have been borne by local taxpayers, not the federal government.
“This massive investment — representing almost $5,200 for every man, woman, and child in New Orleans — while perhaps sorely needed, is not eligible for a FEMA disaster grant because there is no evidence that the damage was caused as a direct result of the storms,” Acting Assistant Inspector General John E. McCoy II said in the new report.
In order to get emergency grant money to pay for repairs, municipalities are supposed to prove that the damage was directly caused by the disaster.
In the case of New Orleans, however, about two-thirds of the city’s water mains were at least 40 years old at the time of the Hurricane, and some 30 percent of them were nearly a century old and “leaking badly” well before the storm, Mr. McCoy said.
The city’s roads were also crumbling before the hurricane, with the city spending just $3 million a year of its money on maintenance ahead of the storm — far less than the $45 million analysts said it should have been ponying up.
New Orleans says it justified all the costs, but Mr. McCoy said there was a startling lack of documentation about the project in both city and federal files.
The city claims records were destroyed during Katrina, but FEMA officials recalled having access well after the storm, the audit said.
Lack of records has been a reason to reject costs in the past, Mr. McCoy said, but for some reason they were approved in this case. The new audit also questioned FEMA’s conclusion that the water system was damaged by a “water hammer” effect, saying the agency used “circular logic” to reach that decision.
The audit urged FEMA to disallow the spending until New Orleans can better prove ties between the poor system and the hurricane.
Mr. McCoy said FEMA’s decision-making was so odd in this case that it called into question the agency’s broader disaster-relief spending.
FEMA says it has no intention of revisiting its decision.
George A. Robinson, the agency’s regional administrator overseeing the project, said officials made site visits, reviewed technical documents and compared pre- and post-Katrina photos and measures to make a decision.
“These repairs are necessary to restore the eligible facilities to their pre-disaster design, function and capacity,” the FEMA official said.
“Regardless of its age, the New Orleans infrastructure was functioning to serve a population of 445,000 prior to Hurricane Katrina. This infrastructure was damaged by Hurricane Katrina and FEMA appropriately limited the approved funding to Katrina-related disaster damage,” the official wrote.