Storms 411

Day 35 – 9/25/05, Where Katrina Aid Is Going

Congress has appropriated $62 billion for Katrina relief, of that mony, about $16 billion has been allocated. A look at the gulf states' potion and how it is to be spent. [via New York Times]

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Day 36 – 9/26/05, Many Contracts for Storm Work Raise Questions

WASHINGTON, Sept. 25 - Topping the federal government's list of costs related to Hurricane Katrina is the $568 million in contracts for debris removal landed by a Florida company with ties to Mississippi's Republican governor. Near the bottom is an $89.95 bill for a pair of brown steel-toe shoes bought by an Environmental Protection Agency worker in Baton Rouge, La.

The first detailed tally of commitments from federal agencies since Hurricane Katrina hit the Gulf Coast four weeks ago shows that more than 15 contracts exceed $100 million, including 5 of $500 million or more. Most of those were for clearing away the trees, homes and cars strewn across the region; purchasing trailers and mobile homes; or providing trucks, ships, buses and planes.

More than 80 percent of the $1.5 billion in contracts signed by the Federal Emergency Management Agency alone were awarded without bidding or with limited competition, government records show, provoking concerns among auditors and government officials about the potential for favoritism or abuse. [Read more - New York Times]

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Contracts will be FEMA’s next Challenge

Sheer scale of Katrina awards raises concerns

The Federal Emergency Management Agency will receive most of the $62 billion Congress has approved for Hurricane Katrina relief efforts, setting up a major test of the agency's ability to distribute the cash and monitor the private contractors who will do much of the work.

FEMA's track record in managing much smaller amounts of money has raised concerns. It made millions in questionable payments to South Florida residents after Hurricane Frances last year, investigators found, in part because the agency's contractors had hired inspectors who lacked training or oversight. A recent audit by the Homeland Security Department's inspector general questioned whether FEMA's acquisition workforce was qualified.

The agency has already begun awarding hundreds of millions of dollars in no-bid Katrina contracts under loosened government rules designed to get relief and rebuilding efforts underway quickly. As the money begins to flow, some fear the agency could become overwhelmed. "They've never spent anything even remotely on this scale. So the real question is going to be what kind of controls are in place," said Bill Jenkins, who monitors FEMA for the Government Accountability Office. "There are going to be fraudsters coming out of the woodwork." [Read more - MSNBC]

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A Storm Surge for Homebuilders?

The prospects of rebuilding hurricane-devastated areas has boosted shares in the sector, but S&P thinks the rally may be short-lived

Large, integrated forest-products companies that produce wood for homebuilding have rallied recently on hopes that they'll benefit from rebuilding the Gulf Coast in the wake of Hurricane Katrina. Indeed, reports of skyrocketing real estate demand in the Gulf region are already appearing, as are rising housing prices even beyond the storm-affected area.

However, Standard & Poor's believes the downside for companies exposed to housing trends will likely outweigh any boost from post-Katrina rebuilding efforts, thanks to climbing energy prices and a likely slowdown in new housing starts nationally. S&P predicts that housing starts will fall from their current record highs, with 8.8% fewer starts in 2006 than in 2005, and an additional 4.8% drop in 2007. [Read more - BusinessWeek]

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Day 22 – 9/12/05, The New New Orleans

The Big Easy and and the Gulf Coast will likely never be the same. But a phoenix could rise anew

The devastation is vast and appalling. As the floodwaters of Hurricane Katrina are slowly pumped away, what's left behind in many places is a wasteland of polluted, rat-infested wreckage.

Now comes the rebuilding -- of not only New Orleans but the entire stricken Gulf region. It will be one of the biggest redevelopment projects in American history. Lawmakers are estimating that federal spending could total $150 billion to $200 billion over several years.

Risk Management Solutions of Newark, Calif., estimates that insurance companies may pay out from $40 to $60 billion in claims, the most ever. Businesses and homeowners will spend many billions more in uncompensated reconstruction expenses. Economists predict that rebuilding could add one- or two-tenths of a percentage point to the national growth rate all through 2006 and beyond. Already, some companies are poised to be winners.

A project of such unprecedented magnitude demands fresh thinking. That's the purpose of this BusinessWeek Online special report -- to bring to light the best ideas for reconstructing New Orleans and other damaged towns, cities, and industrial facilities in a way that is technologically advanced, cost-effective, equitable to all, in tune with the realities of the market, and in harmony with the coastal environment. [Read more - Business Week]

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