To New Orleans, a Few Words from California

Saturday, July 30, 2005

LOS ANGELES—Natural disasters, like wars, test human mettle and bring out the best in many people—courage and selflessness, acts of heroism, and great generosity to afflicted neighbors and total strangers. Sadly, but very predictably, they also generate political opportunism and partisan finger-pointing that is worse than counterproductive. Practitioners of the “blame game” typically do far more to exploit than to assuage the pain of the victims with whom they so ostentatiously sympathize. Katrina has certainly been no exception, with said practitioners absurdly and contemptibly charging the president with racist neglect.

Rather than point fingers, I presume to offer a few practical pointers that I hope will be useful to those who are, or may in future be, challenged to lead their constituents on the hard road back to recovery from a natural disaster.

In early 1994, a major earthquake (measuring 6.7 on the Richter scale) jolted the residents of greater Los Angeles from their slumbers and knocked houses off their foundations. Within seconds, the Northridge earthquake reduced to rubble the overpass bridges of Interstate 10, Los Angeles’s major east-west artery, and thereby instantly shut down the most heavily trafficked freeway in the world. I was advised that it would require some two years and two months to repair the bridges and restore the I-10 to use. For as long as it remained unavailable, it would mean not only driver inconvenience on a dramatic scale but delays that would translate into economic dislocation conservatively estimated to cost $600,000 per day. The interruption to the life of the nation’s second-largest city would be of a plainly intolerable magnitude and duration.

Instead, we completed the repairs and reopened the freeway to its normal heavy traffic in just 66 days. How? We did two things.

  • First, I quickly exercised the extraordinary emergency powers conferred on the governor of California by the state Government Code. I suspended the operation of statutes and regulations that would have required the protracted public hearings called for before environmental impact reports could be filed and acted upon, and suspended other normally demanded procedural hurdles. Eliminating these legal requirements drastically reduced purposeless delays that would have impeded recovery and compounded the injury inflicted by the quake.

    I cannot emphasize too strongly that governors need to be given such clear emergency powers if they are not already provided them by existing state law.

  • Second, we took a page from the book of private sector incentives for accelerating performance. We told contractors bidding to repair the bridges that their bids must specify not only the cost but the date of completion and that they must agree to an added condition: For every day they were late, they would incur a penalty of $200,000; and for every day they were early, they would be rewarded with a bonus of $200,000. The winning bidder, C. C. Myers, Inc., put on three shifts that worked 24/7. To prevent any delay in the work, the company hired a locomotive and crew to haul steel sitting on a siding in Texas to Los Angeles. Myers made more on the bonus than it did on the bid.

    Incentives work. The reward to the contractor in this instance was well worth the price of restoring critical infrastructure two years early.

In New Orleans, all levels of government—federal, state, and local—and the city’s private sector leadership face a challenging threshold decision as to how, or even whether, to rebuild.

Voices from outside the city have been heard dismissing the very notion of rebuilding a place that is 12 feet below sea level. In New Orleans, the critical infrastructure—the system of levees—is, in fact, far more critical than even the world’s busiest freeway. Although the prolonged loss of the I-10 severely affected the functioning of Los Angeles, the loss of the levees threatens the very survival of New Orleans.

I am not an engineer but have been advised that an engineering solution exists that would ensure the reliability of the levees, even in the alluvial soil of New Orleans without the bedrock found elsewhere. That assurance of reliability is key, the prerequisite to the confidence that investors must feel if they are to be induced to rebuild the city and its economy. The rub is that the engineering solution is of such cost that it will challenge its advocates to justify that cost to opponents. Many will demand to know why taxpayers living outside the region should be forced to subsidize it.

Before dismissing that solution out of hand—before abandoning New Orleans and retreating to the terrestrial, if not the moral, high ground—we must exhaust all justifiable alternatives. I suggest that the needed super-levee solution will require sharing its cost between taxpayers and private investors. The public should do what it has done in the past to provide for a measure of flood protection where needed elsewhere in the nation.

Participation by private investors should be enabled by whatever state and federal legislation is required to authorize tax increment bonding to finance the creation of new levees. It should authorize terms that will be able to attract pension funds and other institutional investors, while permitting the city to continue providing essential services. Purchase of the bonds would provide the front money for levee construction. The tax increment legally dedicated to redeem the bonds would be built up as new properties are built in New Orleans, continually adding new assessed valuation to the city’s property tax base.

Tax increment bonding to finance the redevelopment of urban areas is a proven method of attracting private investors to replace blight with privately owned improvements that translate into a growing economy and employment base. I suggest that the same mechanism be employed to finance not only the land assembly for redevelopment of the ruined sections of the city but also the creation of the levees that have to be built if New Orleans is to be brought back.

A final suggestion: I respectfully suggest that New Orleans consider creating a nonprofit corporation to which it can delegate authority to act as the city’s agent in making the complex real estate deals that will be essential to redevelopment. San Diego did so when I was mayor, creating a nonprofit with a paid staff and a board of volunteer real estate and land-use professionals who possessed the expertise and time that the job required—time that the City Council, though designated by state law as the city’s official redevelopment agency, simply could not devote to it. Deals negotiated by the nonprofit Center City Development Corporation were made subject to ratification by the mayor and the City Council. The result was that the pace of redevelopment of downtown San Diego remarkably accelerated. And the quality was so enhanced that our relatively modest public effort continues 30 years later to spur far greater private redevelopment. It has transformed a decaying core with a declining tax and job base into one of America’s most vibrant and thriving urban environments.

I make this suggestion confident that New Orleans is blessed with the dynamic business and civic leaders needed to supply the same kind of motivation to the rebuilding of their city. I have seen this leadership in action. I am privileged to serve as a member of the board of trustees of the National D-Day Museum, which Congress has designated as America’s official World War II museum. It is located in New Orleans, not Washington. It is New Orleans’s gift to America, so that our children and grandchildren will never forget that freedom is not free but must be purchased with the courage and sacrifice of those willing to fight and die for it.

I am convinced that, given time and the right tools, that kind of leadership can be expected—and should be given every chance—to rebuild New Orleans and to make it even better.