Following a background report, three experts discuss Hurricane Katrina recovery efforts and the struggles of Louisiana officials to come up with funds to finance reconstruction.

Background

Discussion

RAY SUAREZ: After the storm, more than half a million residents were forced to relocate across the country in new home, temporary shelters and hotel rooms.

First the Federal Emergency Management Agency, FEMA, said it wouldn't pay for hotel rooms after Dec. 1, a decision that sparked complaints around the country.

But today FEMA's acting director, David Paulison, said the deadline is extended.

DAVID PAULISON: We want these families to be back in some semblance of normalcy. We want them in decent housing. We want them out of these hotels and motels and into apartments.

And let me make this really clear: We are not kicking people out into the streets. We are simply moving them from hotels and motels into apartments that we will continue to pay for. So we're not stopping money flowing. We just don't want to pay for hotels and motels anymore. We want to now start paying for apartments and to move those families in there. And I think that is the right thing to do.

RAY SUAREZ: Most evacuees came from the hardest-hit state, Louisiana. Officials there are struggling to come up with the funds to finance reconstruction. So far, the federal government has approved more than $62 billion for hurricane recovery efforts, but much of that money has not filtered down to state and local governments.

The overwhelming problems have been the focus of a special legislative session in Baton Rouge ending today. Louisiana Gov. Kathleen Blanco opened the session two-and-a-half weeks ago, telling legislators they would have to make tough choices.

GOV. KATHLEEN BLANCO: The challenges presented by our budget crisis are some of the most difficult we have ever faced. We, are very simply put, adjusting to reality. These times and our citizens demand change.

I'm cutting some of your favorite programs. Some of you will consider these cuts way too painful, and you'll try to avoid them. Let me warn you, this is just the beginning.

RAY SUAREZ: The prospect of painful cuts dominated the session. More than $600 million was trimmed from the state budget. Legislators also complained about FEMA and the lack of coordination between federal, state and local authorities.

State Sen. Joe McPherson.

SEN. JOE McPHERSON: FEMA has kind of been like drunk sailors in here the way they've spent their money and thrown it around. A drunk sailor would probably at least know where he put the money the next morning. He could check for receipts and lipstick and stuff.

RAY SUAREZ: The legislature did make progress on several key issues. It passed stricter building codes statewide, set aside low-interest loans for businesses and gave the governor control over most of New Orleans' troubled public schools; a handful of public schools in the city are expected to reopen next month. But some said the session had not addressed the most fundamental issues.

SEN. DONALD CRAVINS: We need to get people into the New Orleans area where they can work and make and contribute in the rebuilding of the city. And, of course, the time has passed now. We're certainly not going to do it this time.

RAY SUAREZ: Only about 15 percent or some 70,000 of the pre-Katrina population has returned to New Orleans. Small businesses and restaurants that once contributed to the city's vibrant atmosphere -- and tax base -- remain boarded up, paperwork for loans caught up in red tape.

Those who have returned in neighborhoods like Algiers and the French Quarter face an uphill battle. Many homes are filled with mold. Much of the city lacks electricity and clean water. And piles of debris still litter city blocks.

Now, three assessments of how the recovery effort is going. Anthony Patton is president and founder of EBONetworks, a marketing company geared toward urban professionals. He's a member of Mayor Nagin's commission to bring New Orleans back. William Hudnut is the former mayor of Indianapolis and congressman. He is now the mayor of the town of Chevy Chase, Maryland, and senior fellow at the Urban Land Institute. He was in New Orleans last week as part of a panel that made rebuilding recommendations to Mayor Nagin's commission. And Walter Isaacson, president and CEO of the Aspen Institute, a research and policy organization; he's the vice chairman of the Louisiana Recovery Authority, a state rebuilding commission established by Gov. Blanco.

RAY SUAREZ: Anthony Patton, let's start with you. I want to get an impression from everybody as we approach three months how things are going. How is the recovery going in New Orleans?

ANTHONY PATTON: Well, the recovery, as told by your summary, is very slow at this point in time. Only 70,000 of our residents have homes that are inhabitable. We want to make sure that the headlines stay in front of the newspapers, that we still need help. We're looking for the federal government to continue to reach out and support us as it did when it pulled some of us off our rooftops. We are in dire straits from our perspective of governmental support, as well as private sector support. We're looking for businesses and those to reach out and help us.

We first want to start by thanking all of the business community and the cities in the southern area that have taken us in and allowed us to have a temporary home, but there's no home like New Orleans for us. We want to go back, and we feel like we have the right to go back, and we hope that the city opens its doors to all of its citizens and allows that to happen.

RAY SUAREZ: Walter Isaacson, your quick overview.

WALTER ISAACSON: I think people are working really hard to get it back. New Orleans has a magic to it that draws people back, as Anthony just said. People want to come home and help. We know we have to do most of it ourselves, and people like myself who live up here in Washington but are from New Orleans, now we're feeling the tug. We want to go back. So I think it's going to lure people back.

I think we're very thankful for all the support we've gotten from around the country, from Washington and other places, but we know we have to do the bulk of the work ourselves. And every time I go back to New Orleans and back to Louisiana in the past three or four weeks, I get kind of surprised by how hard people are working and how the spirit is getting back there.

RAY SUAREZ: Well, you were urban chief executive for a long time, Mayor Hudnut. You just got back. What did you see?

WILLIAM HUDNUT: Clean up the streets, do what you can to bring the city back in a visible way right away. And that is really, frankly, not happening. It's not happening in Jefferson Parish, either, as you drive in from the airport. You see mounds of trash. The mayor says there are seven million tons of trash to pick up; they've picked up two and a half.

Well, before people are going to get any kind of a positive impression, you have got to get the city cleaned up and made safe. And that seems to me to be the number-one priority -- and affordable housing for a lot of people who need it and who can't come back until they get it. So these three things -- safety, cleanliness, if you want to put it that way and affordable housing -- are in my opinion the three top priorities.

And it makes me sad because when you compare the slowness which has already been mentioned of this recovery to what happened after 9/11, you wonder, who is fixing this? Who is in charge? Is there a paralysis here of goodwill? Are people all saying the right things but there's no forward movement? Sure there's been some, and certainly this there is a resilient spirit in the city. And certainly we all believe, I think, that death is a precondition for rebirth.

But the fundamental question is: How are you going to make your -- walk the talk? How are you going to do it? They need people down there to really take charge and fix it.

RAY SUAREZ: Well, Walter Isaacson, $62 billion was appropriated by Congress. How come it's not being spent more quickly? How come the conditions are just as Mayor Hudnut described?

WALTER ISAACSON: Well, first of all, the money that's been appropriated hasn't gone to the state or the localities. That was for the federal relief effort like FEMA, the Corps of Engineers and stuff.

I think Louisiana made a mistake by putting in a $200 billion federal request a few weeks ago -- or a couple months ago when we had a lot of goodwill from around the country. We were just asking for too much. Everything was put on that wish list.

But, by the way, nothing got passed. That bill didn't get passed. So there have been no appropriations that went directly to the state and localities.

And we do hope that people will realize we've set the priorities, which are get the levees and coastal protection back, get small business loans back, and we will do the rest. We in Louisiana will do the rest. We're working really hard because we love the state so much.

WILLIAM HUDNUT: I'm not an engineer, Ray, but I think that they need to consider the urban type of levee rather than the agrarian levee where they just mound up dirt. Everybody has promised that it will be back to a Category Three level by next summer. That's fine. But most of the residents want a Category Five protection, a protection from a Category Five hurricane. And that's going to take many years and billions of dollars to do.

But where is the money, the $60-some billion you talk about going? You still have streets that are lined with cars that are covered with mud and streets that are covered with mud and refrigerators, you know, hundreds of refrigerators all over the place. And somebody has got to start making the cleanup.

RAY SUAREZ: Well, I hear you, Anthony Patton agreeing. Where are the bottlenecks? Why aren't Mayor Hudnut's questions being answered?

ANTHONY PATTON: Well, first of all I agree with Mayor Hudnut. And I want to say hello to him. The Urban Land Institute came down and did sought research and gave us some final recommendations to the commission to form a business plan.

There were three things that I took away from that that I thought were very interesting. Number one was government efficiencies and how to change the structure of Louisiana. We do know that the reputation of our state has not been one that has been a good one. We understand that that is a slowdown, and we're addressing that issue as we speak. I think the mayor and the governor are becoming on board with one another; our commissions which the mayor and the governor both have one, are working in sync. We understand that we have to speak with one voice to Congress and to the president in order to get what we need to happen.

Also, one of the big bottlenecks from my perspective, and I sit on the economic development aspect of the commission, is that we're not getting money directly down to the small businesses. Tim Ryan, who's the chancellor of the University of New Orleans, offered a report that suggested pre-Katrina we had 115,000 businesses in New Orleans, and by Jan. 1, we'll lose 60,000 of those because we don't have the resources.

The SBA process has been a process that has just taken way too long. I know they're working on solutions. They've just recently offered a go loan, which is supposed to help speed up the process, but the problem is if we can't bring back, and I agree completely with Walter, that if we can just open up the playing field, we're not asking for everything to be paid for, but if we can ignite our small businesses, which represents in New Orleans alone 85 percent of all jobs, if we can ignite the small businesses, we'll bring back our own city by ourselves. We just need some support.

RAY SUAREZ: Walter Isaacson, people are probably sitting in the rest of the country and hearing Bill Hudnut talk about cars that are still on the street, hearing Anthony Patton talk about small-business loans that aren't being made and saying somebody ought to take care of it.

Well, is there a somebody, is there a controlling authority that lights a fire under things that aren't going, says yes to good ideas, no to bad ones and pushes this along?

WALTER ISAACSON: Yes, the Louisiana Recovery Authority is now, as Anthony said very well, working very well with the City of New Orleans and all the other parishes. So we've set to clear eight priorities. We've set the spending requests. We've gotten them down to a reasonable level. We have Don Powell, who's a very good, you know, a respectable person who is running for the federal government now, being the coordinator.

We have Deloitte and Touche coming in as the auditing firm so we don't squander any of the money, we don't misspend it. We have zero tolerance for corruption. And, like Anthony said, we're not asking for everything.

The main things that would be helpful right now is to get the small businesses back because that doesn't cost the country something. That will end up helping the economy. If we can just get those small business loans, then those people like they are on Magazine Street now, because they're back, they've cleaned up Magazine Street.

And once you get the businesses back, that's where you get the people working and cleaning up. So you need right now, and I think Anthony said it to, get the Small Business Administration and others really fast to cut the red tape and give those 90-day bridge loans so people can come back right away.

RAY SUAREZ: Okay. Quickly, if only one out of every seven New Orleanians are back in the city, if you get those small businesses open, are there people to come in and be customers, are there people to work the counters?

WALTER ISAACSON: Oh, absolutely. When I go back in the city now, all the restaurants are crowded. Anything that's open, people are flocking to. We need to get more people back because we have a lot of jobs and a lot of work to do.

WILLIAM HUDNUT: They're not going to come back until you get some affordable housing. Mayor Nagin told me that one of the critical needs is affordable housing immediately for the musicians. The Edge is out there trying to hustle musical instruments from around the country to replace the ones that were lost because New Orleans has this great culture. And they have to build on the food and on music and on jazz and on sports. I hope the Saints stay there and the basketball team. They have got a port authority that is a great economic driver for them. And they need to, in my opinion, just get going if you want to put it that way.

That's why the ULI panel that was down there all last week, we interviewed over 300 people. We have 50 people down there from our side interviewing 300 or more. And we recommended the construction or the creation of a temporary financial control board in order to do some of the things that Walter was just talking about --

ANTHONY PATTON: Great idea --

WILLIAM HUDNUT: -- to get control of this and to funnel the money and to make sure that it's not siphoned off into -- a lot of people around the country would call it corrupt endeavors.

RAY SUAREZ: Well, let me say to Anthony Patton, we have two guests in Washington urging people to go back to New Orleans. If you're down there and living in one of the surrounding city, place you've been evacuated to, what is there? Is there any confidence that there is help waiting for you when you get back to town that you'll have help finding a place to live, getting the electricity turned back on, making sure your sewer is reconnected?

ANTHONY PATTON: Well, that's definitely an issue that is being addressed. I will tell you with confidence that ULI made an excellent recommendation that communication has got to improve, and I think that it will. However, I do want to say something about when we had the opening of the show, I overheard an interview from the FEMA representative talking about moving people out of hotels and into apartments.

And, quite frankly, the people of New Orleans feel like that's the wrong move. You're locking people into one-year contracts outside the city of New Orleans. And what that does is it stops those people from partaking in the re-growth of New Orleans and the rebuild.

I would suggest use those same resources, put people up down here in New Orleans next to their home in the hotels or wherever we can find space for them and allow them to be involved in rebuilding their own neighborhoods.

And I think that you'll find things will happen a lot quicker because they're personally invested and it probably will save the taxpayers money, too, because folks want to build their homes; people want to be back home.

RAY SUAREZ: And, Walter, I'm guessing, very briefly, that you'd say amen to exactly that.

WALTER ISAACSON: Amen. Come home to New Orleans, everybody should come home, and even people like me who haven't lived there for a while, it's time for us to come home. It's a great place to live

WILLIAM HUDNUT: They've got to come home to homes or houses. And some of that can't be rebuilt for several years. We have got to face it. New Orleans is going to become a smaller city, but we do hope they'll come home.

That's why the ULI is holding various different public hearings in Dallas and Houston, Atlanta, Baton Rouge and Memphis in order to give those people an insight into what is happening and how they can get home.

RAY SUAREZ: Guests, thank you all very much.