Rebuilding New Orleans

The Federal Emergency Management Agency (FEMA) in 2001 named a major hurricane hitting New Orleans as the most serious emergency threat to the nation. In August 2005, a category IV Hurricane by the name of Katrina ravaged the City of New Orleans. After the storm, LT. General Carl Strock, Chief of Engineers for the Army Corp of Engineers stated “the intensity of this storm simply exceeded the design capacity of this levee…which had a 200 or 300 year level of protection. That means that an event that we were protecting from might be exceeded every 200 to 300 years.” [1] The following probability will be the basis for determining the expected profit of rebuilding the city of New Orleans.

As consultants advising the City of New Orleans, we felt it necessary to quantitatively prove that rebuilding was the best option before exploring recommendations for the rebirth of the city. After proving that rebuilding New Orleans is financially astute, we will discuss the current structure of the Commission along with recommendations for changes that would allow the commission to be more effective. Because of the many diverse groups associated with the BNOB Commission we asses that the ability to negotiate effectively will be key to satisfying the stakeholders and thus achieving the more broad strategic goals. Finally, we should not rebuild the City of New Orleans without a more effective flood control system. We used the concept of positive deviance to identify other areas in the world that have experienced similar disasters and had success in rebuilding. We identified the Netherlands a positive deviant for building a more modern and effective flood control system for New Orleans.

Two estimates will be significant in determining the cost and benefits of rebuilding New Orleans. First, an estimate of how much money will be required to repair the flood damage from Hurricane Katrina. The second important factor is the estimated Gross Metro Product (GMP) for a newly rebuilt New Orleans. I will base this estimate on ¾ of New Orleans pre-Katrina population and multiply this number by New Orleans’ 2004 per capita GMP. This is to compensate for the fact that at least in the short run, a rebuilt New Orleans will most likely have a significantly smaller population due to permanent migrations away from the city.

How much money will it take to rebuild the city of New Orleans? Congress allocated $62 billion in September 2005 and the House of Representatives approved an additional $20 billion on March 16. Obviously, the Federal Government will provide the bulk of the recovery money for damage caused by Hurricane Katrina. There will be additional state; county and city monies along with private donations that will help rebuild the city of New Orleans. A conservative estimate of the amount required to rebuild New Orleans is $28 billion more than the amount promised by the federal government.
So far, $110 billion is the amount needed for rebuilding but this amount does not address the issue of Louisiana’s sinking coast. The city of New Orleans was built on a river delta formed by natural silt deposits from the Mississippi river. After the Great Mississippi floods of 1927, the city of New Orleans surrounded the river with levees to protect the city from future flooding. Hurricane Betsy in 1965 caused a great deal of flooding in New Orleans and the federal government began building more levees to protect the city from a category 3 hurricane. The levees have blocked the natural silt from replenishing the delta, which has caused the coastal wetlands of Louisiana to wash away, and the city of New Orleans to sink deeper below sea level [1]. To combat this degeneration of the coastal wetlands the state and federal government has recently passed a $14 Billion plan to rebuild the wetlands. Many of the levees protecting the city of New Orleans broke during hurricane Katrina and must be replaced. Recently, the Army Corp of Engineers revised their estimates of how much money it would take to rebuild the levees to federal standards. “The change followed a surprise announcement from the Army Corps of Engineers that the levee reconstruction project, most recently estimated at $3.5 billion, would now cost $9.5 billion if insurance-certified levees were extended throughout the region.” [2]

From the above-mentioned costs, the aggregate total is $134 Billion to rebuild the city of New Orleans. This is a conservative estimate, and others have estimated the costs of rebuilding to be as much as $200 Billion, but I will use $134 Billion as my benchmark in the expected profits equation.
The second important estimate to take into consideration is the predicted Gross Metro Product of New Orleans. In 2004, according to the US mayor website, New Orleans Gross Metro Product was $47 Billion dollars for the Metropolitan Statistical Area (MSA). The U.S. Bureau defines an MSA as “that of a core area containing a substantial population nucleus, together with adjacent communities having a high degree of social and economic integration with that core. Metropolitan and micropolitan statistical areas comprise one or more entire counties.” Since the core of New Orleans plays such a key role on the communities surrounding it, I will be using the 2004 metropolitan population of 1,363,750 from the Census Bureau County estimates and multiplying it by ¾ to take into consideration the short term population loss that will take place due to permanent migrations of former New Orleans residents away from the city. I then multiply the derived number 1,022,812 by the 2004 per capita GMP of $35, 606 to give me 36.4 Billion.
Expected Profit = (.005 x -134 Billion) + (.995 x 36.4 Billion) = 35. 5 Billion

Prob. disaster Cost (Bil) Prob. no disaster GMP (Bil) Profit (Bil)
0.005 -134 0.995 36.4 35.548
0.025 -134 0.975 36.4 32.14
0.045 -134 0.955 36.4 28.732
0.065 -134 0.935 36.4 25.324
0.085 -134 0.915 36.4 21.916
0.105 -134 0.895 36.4 18.508
0.125 -134 0.875 36.4 15.1
0.145 -134 0.855 36.4 11.692
0.165 -134 0.835 36.4 8.284
0.185 -134 0.815 36.4 4.876
0.205 -134 0.795 36.4 1.468
0.225 -134 0.775 36.4 -1.94
0.245 -134 0.755 36.4 -5.348
0.265 -134 0.735 36.4 -8.756
0.285 -134 0.715 36.4 -12.164
0.305 -134 0.695 36.4 -15.572
0.325 -134 0.675 36.4 -18.98

Using the information on hand, the expected profit to rebuild New Orleans is $35.5 Billion, which quantifies the decision to rebuild. However, the spreadsheet above indicates that if the probability of a disaster the size of Katrina ever reached the point where a disaster of the same nature took place once every five years (approx. 21% probability), it would no longer be profitable to rebuild the city of New Orleans. The federal government should watch this statistic very closely. Statistically the chance of a disaster of this magnitude hitting New Orleans within the next 5 years is very slim. However, if it did this could be an economic harbinger for the federal government to close shop on any projects in New Orleans, move historical buildings out of the area and invest any remaining money in either the expansion of Baton Rouge or the movement of New Orleans to a safer area.

In the aftermath of Hurricane Katrina a team of six qualified urban planners were assembled to assess the capacity of the city’s planning function. The American Planning Association assembled this team as part of a request by the New Orleans City Planning Commission in association with the Louisiana Chapter of The American Planning Association. The present plans are for the City of New Orleans to be different in the future. Hurricanes Katrina and Rita changed the landscape and the community forever.

Mayor Ray Nagin led the efforts in the establishment of the commission. In fact, Mayor Ray Nagin created The “Bring New Orleans Back” (BNOB) Commission. The mayor was faced with the monumental task of developing a plan for the city’s rebirth by the end of the year. Mayor Nagin saw fit to engage a panel of civic leaders for the task. While the key members of the BNOB Commission have attempted to explain the full mission and concept of their organization, they have not official revealed their strategic goals, or a comprehensive plan. In a news briefing, Mayor Nagin stated that “The commission is charged with a fundamental goal to advise, assist, plan and help the city of New Orleans as it makes recommendations for how the city will be rebuild. Additionally, New Orleans Archbishop Alfred C. Hughes stated that “the commission members represent a cross-section of race, ethnicity, geography, background, expertise and experience”. The primary attribute that unites the current members of the BNOB Commission is a commitment to work together for the common good. Archbishop Hughes said that Mayor Nagin gave them a mandate: “To finalize a master plan, to advise, assist and plan the direct funding of the rebuilding of New Orleans culturally, socially, economically and uniquely for every citizen.” The Commission’s deadline for delivery of the plan was December 31, 2005. The Mayor will present the plan to the City Council for review, refinement and adoption.

The commission further divided into seven sub-committees. These sub-committees are chaired by members of the Commission and composed of people from the community. The issues that they will be addressing include urban planning for housing and land use, infrastructure, economic development, education, health and social service, culture and administration and/or government efficiency. Four of the most important sub-committees are: The Education Committee, The Cultural Committee, The Technology Committee and The Government Effectiveness Committee. The Education Committee is responsible for developing a plan to reform and rebuild the educational system in Orleans Parish. The Cultural Committee is developing a plan to repair and rebuild the cultural fabric of New Orleans. Hence, the Cultural Committee’s objective is to establish a sustainable economic environment for the local creative industries
by preserving in perpetuity the heritage and vitality that create a unique cultural fiber. The Technology Sub-committee’s goal is to assure an open, inclusive and vibrant business community that will create a livable wage and higher salaried jobs. The Government Effectiveness Committee will recommend changes in local government structure and function that would ensure effective responses to the challenges facing the city post-Katrina.
Despite their efforts, it took four months after Hurricane Katrina devastated New Orleans before it unveiled its plan. In this plan, the mayor approved a moratorium on building permits. Most affected by this proposal were lower income areas of New Orleans. Not only did the mayor and the commission impose the moratorium on the poorest of citizens, but it also forced that same region to pass a so called “critical mass” test if they would have any chance of returning to their property. During this same period, it was incumbent upon the residents to demonstrate with sufficient and substantial evidence that the community could meet the “critical mass” in their neighborhoods that the population planned to return and rebuild. People from those neighborhoods and communities that failed to obtain the needed numbers to past the “critical mass” test would be at risk losing their property. The Crescent City Redevelopment Corporation would buy some out and others would be seized through eminent domain. Areas not rebuilt would be returned to wetlands and green space.

The Bring New Orleans Back Commission’s mission in part is to develop a master plan for rebuilding the City of New Orleans. The master plan is broad in scope and focuses initially on the displaced citizens of New Orleans. The commission set out to host six town hall meeting to gather displaced citizens of New Orleans input into the rebuilding strategies and to foster constructive participation in the revival of New Orleans. The six meeting will be held in Atlanta, Ga., Houston, Tx., Baton Rouge, La., Memphis, Tn., Dallas, Tx., and Fort Worth, Tx. All of these communities were selected because the relocation areas where the largest portions of New Orleans residents now reside.

The Urban Land Institute (ULI) is the agency that stands at the forefront of BNOB Commission. ULI, an international research and education institute dedicated to responsible land use, will assist the commission with its master visioning efforts. The program of work will be carried out through four key activities: 1) the formation of an advisory panel of international and national experts on post-disaster redevelopment and urban regeneration; 2) the development of Ten Principles for Temporary Communities; 3) input from the breadth of ULI’s membership; and 4) coordination with other groups who have dedicated valuable resources to the rebuilding effort. Immediately after inception the ULI presented a proposal to support the commission’s goal to develop a rebuilding vision during the first three months of the entity’s tenure. It is imperative to protect this extraordinarily valuable asset. This statement is on the minds of many of the displaced residents.

The BNOB Commission is faced with several essential elements that are crucial to the economic recovery of New Orleans, so much so that it was made a part of the plan to rebuild. The BNOB Commission felt that they must focus on these four areas; Administration of Funds – they feel that with the funds obtained from government agencies and private donors they must maintain sound fiscal management structure to maximize its impact. The administration felt that without sound fiscal management structure many businesses and other industries would break down or not return at all. In this plan, it speaks of the need to be business friendly. Because of the major setback that Katrina imposed, and a significant competitive disadvantage, the administration felt that the city that they must consider adjustments to taxation and regulation accordingly to get the industries and business back and running. The BNOB Commission has developed plans to jumpstart the economy as an immediate action that must be taken. Their reasoning behind this move is to get industries operational and returned to steady state business as usual. Other measures include temporary housing, government guaranteed loans and grants, and business incentives are essential, tax-exempt bond financing for rehabilitation of business properties in the disaster zone. The BNOB Commission feels that without the security of the infrastructure investors will lose confidence. Therefore, the infrastructure of the city must be sound for business to flourish. A secure infrastructure would mean, levee system repaired to category III storm protection. The committee’s approach focused on two physical scales and periods simultaneously. City residents of New Orleans denounce the rebuilding plan of the “Bring New Orleans Back Committee”. Based on the plan more than two third of the poorest and hardest hit communities would not be allowed back to begin rebuilding. In addition, Mayor Nagin imposed a moratorium on the issuance of building permits. The moratorium is expected to last for approximately four months.

During the city’s imposed moratorium each affected neighborhoods must demonstrate the existence of sufficient “critical mass”. The residence must demonstrate this by showing that at least one half or more of the population intend on returning and rebuilding. This is a monumental task that the administration is placing upon the residents on such short notice considering their financial situation.
An overwhelming number of the displaced residents feel as if the plan amounts to a calculated scheme to depopulate the low-income parts of New Orleans. They also feel that wealthy investors will, at some point, get an option to purchase the vacant land at very low prices and later make a killing in the real estate market. Moreover, tens of thousands of working class New Orleans residents scattered over the United States think that they will be left out on their own as Mayor Nagin underscores an agreement of the two political parties to tailor the rebuilding effort to the wealthy.

The same sentiments were driven home when President Bush visited and underscored his administration’s opposition to boosting the city’s limited resources. The President’s demeanor and comments revealed his true feeling toward the suffering of the poorest residents. The President’s took a 10-minute ride from LAI Airport to a closed-door meeting with business leaders and elected officials in an area showing no signs of hurricane damage. The Bush administration touted support of $3.1 billion in federal funds to repair and reinforce the levees. However, experts estimate that it would cost over $9.5 billion – or more than 3 times what the Bush administration is willing to spend.
The organization responsible for the reconstruction of New Orleans, BNOB Commission has several faults, which will ultimately decrease its effectiveness in completing the rebuilding of the city. The primary fault is the fact that the commission did not identify all of the stakeholders, therefore the organizations mission, and strategic goals have not taken into account many of their needs. This will ultimately cause problems as the reconstruction of the city proceeds and conflicts arise. The association of homeowners in the lower 9th ward, who is currently pursuing legal action against the city of New Orleans to prevent their homes from being demolished after failing to show they could achieve “critical mass” as previously discussed, is having a significant negative impact on reconstruction efforts in the area.

There are several reasons that the BNOB Commission has not integrated all of the stakeholders into the overall process of planning the reconstruction. The primary reason is a large portion of the population, particularly in the poorer areas of the city, has not returned to New Orleans. Related to the first reason, the second reason is, some special interest groups appear to be taking advantage of the fact that there are people have not returned to accomplish their goals.

Our team is recommending a “whole scale change” approach to helping the organization to move from its current structure to one that; integrates all key stakeholders’ needs. (The Change Champion’s Field Guide, 5) Ensuring the interests of all key stakeholders are integrated into the Strategy and actions will require the BNOB Commission to create a structure that can identify and integrate conflicting positions among all of the stakeholders to ensure that each contributes to the overall success of the reconstruction program and not just to their own area of interest.

In discussing, the actions required by the BNOB Commission we will talk first about the most complicated; integrating all of the stakeholders needs into the process. The primary reason that this is so difficult is, many of the displaced people from the city of New Orleans are scattered across the country and even simple communication with them is challenging. First, there must be a concerted effort to identify and contact those people to determine whether they plan to return to the city. Second, after taking into account their interests (homeowner, business owner, etc.) they should be educated and given the opportunity to align themselves with different representative bodies based on those interests. Only after these groups of stakeholders have been identified and made their interests known can the BNOB Commission truly move forward with confidence that they are operating with the stakeholders interests in mind.
Before moving on, a brief mention of the star model of success is important. (The Change Champion’s Field Guide, 9) The BNOB Commission must consider each star point to have a clear understanding of the strategic direction, what work they must do to reach their goals and how they should accomplish that work. Of the five star points one, the resources point, enjoys broad support from the American people and all levels of government from local to federal, so for the purposes of this discussion we will assume that the resources point is “twinkling”. Two other points, processes and form, as related to the reconstruction effort itself are both somewhat driven by the nature of reconstruction work. We will consider both of these to be sufficient as long is they are both designed to allow the different parts of the organization to efficiently accomplish their goals ensure that each goal supports the achievement of the overall strategic goals. Since we discussed Strategic Direction earlier, I want to focus now on shared information.

Sharing information within an organization so diverse and geographically separated is a significant challenge, but one that must be met if the organization is to reach its goals. Information sharing must be seamless from the onset. Just to get the word out to all of the scattered stakeholders will require extensive use of mass media. After the organization is more firmly established an organizational structure must establish the microcosm(s) using organizational structure to build committees and subcommittees and connecting them through simple effective communications methods. The BNOB Commission must develop systems to ensure continued interaction between committees and subcommittees to maintain focus on the larger “system”.

To summarize, processes, forms and resources will likely not be the major challenges of BNOB Commission. Rather it will be effectively sharing information across diverse groups and over large geographic areas and establishing strategic goals that truly represent the stakeholders in the reconstruction of New Orleans. Both will require organizational leadership that truly has the best interests of the stake holders in mind as well as leaders that are willing to courage to allow all of the voices to be heard. Ultimately, if they fail to capture the true strategic goals of the people who will live in New Orleans after the reconstruction is complete the people will miss an excellent opportunity to reshape their city into something that is more than the sum of its parts.

The power of negotiation is vital to the success of BNOB Commission. There will be many different viewpoints from each sub-committee as well as each population group in New Orleans. In order for the Mayor’s plan to come to fruition, there needs to be a consensus to one idea and that idea needs to be effectively coordinated within the committee and the citizens of New Orleans. The structure is already set to perform a strategic negotiations committee. This committee should have a negotiator to represent each subcommittee from the educational, cultural, technology, and government, and other groups. In addition, there needs to be representation from the citizens of New Orleans. This piece of negotiation is the most important, because the displaced citizens are the main effort of this rebuilding process.

The negotiations committee works directly for the mayor. Their main goal is to have each committee and group in agreement with one idea that takes into account all of the following: coordination, timeline, and resources/funding. Each group is going to have their own idea of how to accomplish this, so the negotiations committee should put these ideas together into one consolidated plan. Once the mayor approves this plan, the implementation will occur in an efficient manner in which all parties involved are supportive and willing to help in the rebuilding process.

The task of negotiations should be handled first within each subcommittee. The subcommittees or groups should come up with one plan in place that includes all of the main elements discussed above. We will presuppose that the Mayor has already sectioned the city of New Orleans in zones and that a substantial population of citizens from each zone is represented in each work group or committee. Once a plan is developed, the negotiator should develop the “Best Alternative to the Negotiated Agreement” (BATNA) for negotiations with the other committees or groups.

After each group has met and formulated a detailed plan, the negotiating committee will meet and present these plans with broad guidelines set by the mayor such as: timeline, budget, and resources. This process will take some time as negotiators will have to go back to their committees repeatedly to develop new BATNAs. The result should be an agreement on one plan composed of all groups in which all broad guidelines are met and mutual gains between the subcommittees are realized. These are the suggested steps for a negotiations committee to take in the planning phase of the rebuilding effort. We believe that once these steps are taken; the implementation phase will run effectively and efficiently.

Jerry Sternin describes Positive Deviance as “based on the belief that in every community there are certain individuals/entities whose special practices or strategies enable them to find a better solution to a pervasive problem than their neighbors who have access to exactly the same resources.” (The Change Champion’s Field Guide, 20) Although Sternin’s focus was individuals, the same principle can be applied to countries. Some countries can develop special practices or strategies that distinguish them from other countries with similar problems. Living below sea level and fighting the water are situations that both the Netherlands and the City of New Orleans faced. However, the Netherlands, the positive deviant learned on earlier in its history the importance of defending its shores from the onslaught of the unpredictable sea.

How do we know that the Netherlands is a positive deviant? On January 9-12 2006, five months after Hurricane Katrina ravaged the city of New Orleans. The governor of Louisiana as well as an entourage of state senators toured the modern flood protection system developed in the Netherlands to learn more about effective water control. The education that they received in the Netherlands will hopefully lead to the construction of an effective flood control system set up in the city of New Orleans.

The Netherlands learned the hard way the importance of having a competent water control plan in place. In 1953, the Netherlands experienced a flood, which was the worst Dutch disaster in 300 years. “In February 1953 the Netherlands faced disaster when the dikes protecting the southwest of the country were breached by joint onslaught of a hurricane force northwesterly wind and exceptionally high spring tides…resulting in almost 200,000 hectares of land swamped, 3000 homes and 300 farms destroyed and 47,000 heads of cattle drowned.” (The Holland Ring) The disaster was a wake up call for the country and inspired the Delta Project that would one day be considered the most advanced water control system in the world.

The significance of the delta project was the fact that it was based on a cost-benefit analysis. “The required safety level was based on a comparison between the economic damage owing to failure of seawalls and the cost of strengthening the coastal defense works.” (d’Angremond) This detailed analysis meant that much more money was spent on protecting highly populated areas with flood walls that would be exceeded only once every 10,000 years vs less populated areas with dikes that would be exceeded once every 1,250 years. This is a vast contrast to the levees in New Orleans which where built to be exceeded once every 200 years.

The Oosterschelde dam is 1.75 miles long and crosses three channels in the Eastern Schelde. The dam is made up of 65 pillars, which can slide 62 iron floodgates in less than an hour during an emergency. This is an example of the ingenious Dutch engineering that has made the Netherlands safe from major flooding in the last fifty years.
The Maaslandkering storm surge barrier at Rotterdam is the largest hydraulic project in Netherlands. Almost as long as the Eiffel Tower in Paris and weighs four times as much. If a water level of 3.20 metres above NAP is anticipated for Rotterdam the Storm Surge Barrier in the New Waterway has to be closed.

As a group of consultants, we were charged with assisting the Bring Back New Orleans Commission in developing a successful organization. After a cost benefit analysis, which validated the BNOB Commission’s decision to rebuild New Orleans, we explored the current composition and disposition of the BNOB Commission. We discovered that there were some shortcomings in the Commission, which were holding it back from achieving its goals. While our recommendations for change to the organization will assist them in ultimately achieving their goal, we identified that due to the complexity of the organization negation skills and strategies would be crucial to success. Finally, we used the concept of positive deviance to determine that Norway’s complex national flood control system could be a model for the future reconstruction of the city of New Orleans.


[1] Hurricane Preparedness for New Orleans

[2] Levee Repair Costs Triple

[3] Sternin, Jerry, The Change Champion’s Field Guide, Practice Publications, 2003

[4] 1953 Flood Disaster: The Dutch Struggle against the water

[5] D’ Angremond, Kees: From Disaster to Delta Project: The Storm Flood of 1953. March 2003

[6] Bring New Orleans Back Commission Announced. 5.11.2006. &task=view&id=83&Itemid=37

[7] Bring New Orleans Back. 5.01.2006

[8] Bring New Orleans Back Commission to Work with Urban Land Institute on Developing Rebuilding Strategy for the City. 5.01.2006

[9] City residents denounce “Bring New Orleans Back” rebuilding plan. 05.06.2006.