Gulf Coast officials: FEMA understates project costs

State and local representatives from the Gulf Coast told lawmakers Tuesday that the Federal Emergency Management Agency has underestimated the cost of many projects to rebuild after hurricanes Katrina and Rita, and that the process for seeking funds has been a significant cause of delays.

In testimony before the Senate Homeland Security and Governmental Affairs Ad Hoc Subcommittee on Disaster Recovery, the officials said FEMA's project worksheets -- the documents used to determine the scope of work and estimate costs -- are one of the biggest roadblocks to post-hurricane recovery. The worksheets, compiled with documents provided by local governments and approved by FEMA, become the basis for funding the Public Assistance Program.

The worksheets "have been a persistent area of difficulty and challenge as we have worked to recover from the devastation of Hurricane Katrina and the subsequent flooding," New Orleans Mayor Ray Nagin told the subcommittee.

According to testimony from Nagin and others, FEMA has been low-balling the costs of many rebuilding projects, with actual costs as high as four to five times the amount allocated through the project worksheets.

While FEMA has obligated 81 percent of Louisiana's project worksheet funds, a state official said even the full sum on the worksheets would not cover the costs in Louisiana.

"We believe that at least 75 percent of our projects are grossly undervalued," Jeff Smith, acting director of the Louisiana Governor's Office of Homeland Security and Emergency Preparedness, told the subcommittee.

In addition, Smith said there is a difference between funds obligated for the completion of new tasks and money needed to cover the cost of completed projects that went far over budget. The fact that FEMA has obligated money for ongoing projects does not guarantee that the state will get reimbursed for completed projects that exceeded budget estimates.

Smith said it is safe to assume that FEMA would need to spend two to four times more than it projected to cover costs.

James Walke, the director of the public assistance division of FEMA's disaster assistance directorate, disagreed, saying state and local officials had "concurred with many or most" of the processed worksheets.

Sen. Mary Landrieu, D-La., expressed concern that small towns or localities may feel pressured to accept the sums on the worksheets because they lack the resources to appeal FEMA's allocations.

Henry Rodriguez, the president of Louisiana's St. Bernard Parish, said many subcontractors hired to work on projects have not been paid because of underestimates on worksheets and delays, causing them to refuse to bid on future projects.

"There is no assurance you're going to get paid with FEMA," Rodriquez said. "The only thing consistent with FEMA is inconsistency."

Rodriguez said that under normal circumstances, state or local governments would be able to pay the contractors and get reimbursed by FEMA. St. Bernard Parish, however, was completely destroyed in the storm and spent its reserve fund within weeks. Every home in the parish was declared unlivable, eliminating its tax base.

Landrieu asked FEMA to give the subcommittee a breakdown of how many project worksheets had been immediately agreed upon by FEMA and the relevant local authority, and how many had been debated and agreed upon, vehemently disagreed upon but approved or formally appealed.

Landrieu said these numbers would give the subcommittee and Congress as a whole a better idea of the extent of underestimations and where the flaws are in the project worksheet process.

"What's stymieing this recovery is not the will of the people; it's the bureaucracy of the government," Landrieu said. "We're going to plow through this."