Restoration of New Orleans becomes private-market affair


NEW ORLEANS -- Laurie Vignaud faces a double dilemma: If she rebuilds her wrecked ranch house at 1249 Granada Drive in the great suburban expanse south of Lake Pontchartrain, will her neighbors do the same? And if they do, will that guarantee that their Gentilly neighborhood does not end up an isolated pocket in a diminished, post-Katrina New Orleans?

Nothing in Vignaud's 46 years, not even her job as affordable-housing vice president with Hibernia Bank, the region's biggest financial institution, prepared her for this problem.

From her relocated offices in Houston, she recently confessed, "It's scary. I don't know when I'll ever go home."

Double dilemmas abound in this deeply damaged city and represent considerably more than the start of the slog back from disaster.

Lost amid continued talk of billions in federal aid is the fact that most homeowners and businesses are being left to make the toughest calls on their own.

Lost is that New Orleans' recovery -- which President Bush once suggested would be one of the largest public reconstruction efforts the world has ever seen -- is quickly becoming a private-market affair.

"My constituents have pretty much concluded that it's up to us to put our neighborhood back together and get on with our lives," said Republican City Council member Jay Batt, who represents the Lakeview neighborhood just west of Vignaud's area.

Risks are staggering

To market advocates, this is the way it should be. Rugged individuals settled the American West in the 19th century and can resettle the Crescent City in the 21st.

But the risks that individual New Orleans residents must shoulder in such an on-your-own recovery appear staggeringly large.

"There is no market solution to New Orleans," said Thomas C. Schelling of the University of Maryland, who won this year's Nobel Prize in economics for his analysis of the complicated bargaining behavior that underpins everything from a simple sale to nuclear confrontations.

"It essentially is a problem of coordinating expectations," Schelling said of the task that Vignaud and her neighbors must grapple with. "If we all expect each other to come back, we will. If we don't, we won't.

"But achieving this coordination in the circumstances of New Orleans," he said, "seems impossible."

Prospects for a quick municipal comeback peaked 17 days after the hurricane and flood when President Bush stood before St. Louis Cathedral in historic Jackson Square and told a national television audience that "there is no way to imagine America without New Orleans, and this great city will rise again."

The hopes thus raised were kept alive for several months. The president sought first one, then two, acts of emergency spending totaling $62 billion. The Army Corps of Engineers quickly signed contracts to rebuild the city's protective levees to their pre-storm condition.

The Federal Emergency Management Agency announced it would award 60,000 households the maximum allowable relief of $26,200.

A steady stream of planning conferences by architects, urban experts and political leaders spread the good word that major metropolises never die.

New reality

But in recent weeks, a new reality has settled in as agencies that were stepping up to help guide the city's comeback have stepped down.

FEMA said it would stop covering the hotel costs of more than 50,000 households at the beginning of this month -- later extended until January -- even while acknowledging that many, especially in New Orleans, will have trouble finding alternative accommodations.

Despite repeated pleas, the Corps and the White House refused to promise any strengthening of the levees beyond what's already under way.

Investigators, meanwhile, concluded that several of the protective walls that failed did not meet Corps-approved standards, a discovery that raised doubts about the safety of the entire levee system.

Emergency spending slowed sharply.

The national flood insurance program temporarily suspended claims payments for Katrina, and program officials hinted broadly that they will tighten eligibility requirements to obtain coverage for the next one.

Even the tiny agency charged with gauging the elevation of America's ground added an unexpected hurdle. It quietly announced that New Orleans and environs sunk more than anticipated, forcing it to replace all of its measuring sticks. The result is that New Orleans residents will have to build higher to escape future floods.

With so many new strikes against it, the city's recovery, already grindingly slow, has ground slower.

Three months after the storm, Entergy New Orleans, the bankrupt utility that serves the city, said that 55,000 of its 190,000 customers have resumed electrical service. Municipal officials estimate that less than one-third of the population has returned to live.

To an extent almost inconceivable a few months ago, the only real actors in the rebuilding drama at the moment are the city's home and business owners.

Left on their own

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