FEMA Underestimates Costs of Hurricane Katrina Repairs

WASHINGTON – Many initial estimates by the Federal Emergency Management Agency of the cost of repairing thousands of water-logged buildings, cracked pipes and crumbling streets in hurricane-staggered Louisiana were way too low — and some reconstruction projects are being held up because of it.

Some local governments say they cannot legally or financially hire contractors and get on with the work, because they fear they will be saddled with repair costs that won't be reimbursed by Washington.

The FEMA estimates were made as part of a federal program under which local governments make repairs at their own expense, then ask for reimbursement from the federal government.

The low-ball estimates were done by sometimes-inexperienced estimators hurriedly hired and trained by FEMA in the aftermath of Hurricanes Katrina and Rita, which struck last summer and fall. Often, the estimates were based on the much-cheaper, pre-storm costs of labor and equipment.

"We want our fair share," said Cary Grant, New Orleans' assistant chief administrative officer for budget. "We're grossly underfunded."

Statewide, local and state officials have identified 17,000 projects that could be eligible for federal reimbursement. State officials said many of the initial estimates on those projects are way off.

In many cases, the disparities are staggering. At one recreation center in New Orleans, for example, FEMA estimated repairs would cost $312,000; the city says it actually will cost more like $1.4 million.

The few bids St. Bernard Parish have received for repair work have come back two or three times higher than FEMA's estimates, said Chris Merkl, the parish's public works director.

FEMA officials acknowledge some estimates may be too low, but do not believe the problem is widespread, said FEMA spokesman James McIntyre. Cities, parishes, sewer boards and other government entities can appeal to FEMA for higher reimbursement.

"If we need to look at 17,000 appeals, we'll look at 17,000 appeals," he said, though he maintained that will not be necessary. FEMA officials plan to meet with state and local leaders to discuss the issue in coming days, McIntyre said.

Grant and other New Orleans officials said that in smaller disasters or with estimates closer to reality, the city could afford to hire workers and sort out the differences with FEMA later. But the sheer number of projects and the steep differences make that impossible for all but a few high-priority projects.

"The citizens of New Orleans don't understand the process. They're like, `The lights should be fixed at the park. Why is the city not fixing this and that?"' said New Orleans interim recreation director Larry Barabino Jr. "They want everything yesterday. They don't want to hear no excuses."

Grant said most of the city's 860 pending projects should be re-examined by FEMA, even though such a review could cost considerable time and money. In a few cases, he said, FEMA may be able to look at the paperwork and re-estimate based on updated labor and material costs without doing site inspections. But Grant said many new inspections will probably have to be done.

"That's what my great fear is: the actual man-hours it would take to crawl on your knees and go floor by floor," Grants said.

Most of the low-ball estimates by FEMA workers and contractors resulted from dramatic increases in labor and material costs in a region where the demand for construction workers to do such things as gut buildings, replace roofs and lay tile outstrips supply, according to local officials.

But other low estimates resulted when inexperienced FEMA contractors included, for example, only the cost of fixing a hole in a roof and not the damage done when a temporary tarp was installed to cover the hole, said Grant and other New Orleans officials.

FEMA engineers working in the region are trying to take rising costs for supplies and labor into account, McIntyre said.

"I'm not trying to downplay it," McIntyre said of the complaints. But "we are bound by law to ensure that we are using taxpayers' dollars properly."