Untapped Cash: S&WB's federal funds mostly unspent 10+ years later

As the drainage system sat in disrepair, tens of millions in federal funds were unused.

Untapped Cash: S&WB's federal funds mostly unspent 10+ years later

Down the Drain is a WWL-TV investigative project that explores what went wrong and where the blame lies for New Orleans' drainage crisis. Down the Drain was reported and produced by WWL-TV's investigative team: Katie Moore, David Hammer, Mike Perlstein, TJ Pipitone and Danny Monteverde. Infographics and multimedia design by Sam Winstrom and Kevin Dupuy.

NEW ORLEANS -- Osmond Caston isn’t an expert on the Sewerage & Water Board’s ancient power turbines and drainage pumps, but he knows a thing or two about maintaining century-old machinery.

He owns an auto hobby shop in the Desire Neighborhood, where he recently brought a 1947 Ford back to life.

“The comparison to the pumps and the generators at the Sewerage & Water Board, they didn't maintain it,” he said as he stood over the purring engine of a 70-year-old classic. “If they would have maintained it, it would start up and run just like this.”

Caston is right about the lack of maintenance at the S&WB. 

WWL-TV reviewed years of the agency’s maintenance logs and found a backlog of nearly 4,000 daily repair orders. Mayor Mitch Landrieu acknowledged the problem at a recent board meeting.

“It has huge deferred maintenance issues that's been going on for 40 years and we're doing the best we can to stabilize it and fix it,” he said.

WWL-TV also looked at the S&WB’s financial reports and found there was not enough money in the Drainage Department’s annual budgets for any long-term projects. The agency raises more than $100 million a year for its Sewer Department and even more for its Water Department through service fees on customers’ bills. But it only raises about $56 million a year for drainage from three tax millages.

MORE: S&WB wasting tens of millions on power plant project

After paying employees, facility costs and debt service, there’s little money left for any major repairs.

“We will only be able to generate $6 million of cash -- of revenues in excess of expenses -- to pay for drainage projects,” then-S&WB financial chief Robert Miller told the board in 2014. “So, what that leaves is $38.9 million or about $40 million unfunded. What happens to those projects? Those are deferred until down the road.”

But those excuses don’t sit well with Caston, whose hobby shop and meticulously maintained cars flooded twice when the city pumps failed, on Aug. 5 and again on Oct. 2. Like many residents, he knows his S&WB bills have skyrocketed and billions of federal dollars went to improve the S&WB power plant and pump stations after Hurricane Katrina.

“Where’s the money going?” Caston asked.

The answer is that most of the federal aid went to the Army Corps of Engineers, not the S&WB, and the smaller portions that did go to the local agency have been spent very slowly and, at times, in dubious ways.

A representative said the city didn't feel comfortable spending any of the HUD money until the Trump administration gave final approval to the plan in June.

MORE: HUD labels N.O. 'slow spender' of drainage aid

After Katrina, more than $15 billion went to the Corps of Engineers for hurricane protection -- for levees and floodwalls surrounding the metro area; for gates and massive pump stations where the outfall canals feed into Lake Pontchartrain; and for underground box culverts to push storm water out of Uptown and other parts of the city.

Some Corps projects have been questionable, including a $16 million generator and building at Drainage Pump Station No. 7 in Lakeview that can only power one of the five pumps there; or a $25 million storm-proofing project at Pump Station No. 5 in the Lower 9th Ward that wasn’t completed, leaving one of the buildings with peeling plywood on the windows.

But the vast majority of the Corps money from Congress’ Iraq War supplemental funding has been spent, and it’s helped make critical improvements to fight storm surge and even to help the S&WB with its mission of internal drainage, such as the $31 million turbine and generator the Corps installed at the S&WB’s Carrollton Power Plant.

The problem is the federal money FEMA and HUD approved for the S&WB that’s still sitting in Washington, D.C. Those two federal agencies set aside nearly $500 million after Hurricanes Katrina, Gustav and Isaac specifically for drainage, power and pumps in New Orleans, and only a little over a third of it has been spent.

Some of that money was only to repair broken infrastructure and return it to its pre-storm condition. It took almost 10 years for the city’s Public Works Department and the S&WB to work out an agreement with FEMA to let the two agencies share an additional $2 billion for street repairs, which would include work on drainage lines and catch basins. But in a year and a half since that agreement, the agencies have spent just $1 million, or half of 1 percent of the grant.

And there were also significant amounts of money to make improvements to the system. FEMA and HUD combined to grant New Orleans nearly $300 million for green infrastructure projects – storm-water retention ponds, bioswales and other “living-with-water” initiatives. Less than $10 million has been spent.

FEMA also gave the S&WB $150 million in Hazard Mitigation grants for its overmatched power plant. Of that, only $50 million has been spent in five years, mostly on tenuous or outright-unsuccessful efforts to refurbish the old power turbines.

To watch the full Down the Drain special click here

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