Friday, March 24, 2006

The Early Bird... Oh, Never Mind

My earlier post about the flooded automobiles gets a new twist. Now that the firm initially awarded the contract has pulled out and the mayor went on the radio yesterday to explain the process, we find out today that the city's hesitation in awarding the contract will cost the city even more money.

Months of wrangling by New Orleans and state officials about contracts for the removal of flood-wrecked cars could prove costly for local taxpayers, federal officials said Thursday, because it will likely push the job past the expiration date for full federal reimbursement.

All requests submitted to the Federal Emergency Management Agency after June 30 will be subject to a 90 percent reimbursement rather than the 100 percent standard in place until then, FEMA spokeswoman Elizabeth Childs said. That could prove problematic for New Orleans, where officials estimate the work to remove the cars could take six months. In addition, city officials concede they lack sufficient funds to pay for the work.
Yesterday Mayor Nagin stated that FEMA would not allow the city to make a profit from the clean-up. But it seems the actual requirement is a bit more nuanced.
Even then, Nagin said, the city wouldn't make money because FEMA would demand payment for its earlier coverage of the towing costs. That plan for reimbursement also reduced concerns about how much the work would cost.
So, did the city think that reimbursing FEMA could simply be considered a cost of doing business? For example, if the city were to profit $5 million from and had to reimburse FEMA say $3 million, then the city would have cleared at cool $2 million. Even if it owed FEMA $7 million, the cost to the city would have $2 million. A whole lot less than the $23 million it would have paid CH2M.

Ray Nagin's campaign four-years ago was that he was a businessman and would run the city as such. At first he did, now that really could use a businessman, he's acting like your run-of-the-mill Louisiana politician.

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