Allison Lack

Who gets priority in times of crisis?

With the second anniversary of Katrina just passing and the six year mark of 9/11 approaching it’s a time of sadness but should also be a time for reflection.

Billions of public dollars have been spent on the recovery process in both the Gulf States and New York City in the name of economic development, but how much of this has gone to communities and businesses most in need of jobs and new investment? What should happen with the remainder of recovery-related economic development funding and what lessons can we learn from these two disasters?

There has been an unprecedented amount of resources ($20 billion in New York City and an estimated $19 billion in federal funds alone for Mississippi and Louisiana) for economic development recovery, but woefully little public accountability. What we do know is that in New York and Louisiana, the majority of funds created after the disasters have largely bypassed small businesses and the communities most in need of assistance.

In New York, the Lower Manhattan Development Corporation, a state public authority created by then-Governor Pataki and then-mayor Giuliani, has been responsible for the allocation of $2.7 billion in discretionary rebuilding funds. The board is now made up of appointees from the Governor and the Mayor. Due to a variety of local political issues, most decisions were left in the hands of then Governor Pataki and the business-dominated board. The majority of capital grants went to the more affluent neighborhoods of Tribeca and the Financial District, and little to the hard-hit but low-income neighborhoods of Chinatown and the Lower East Side.

Liberty Bonds (cheap and tax exempt financing), have gone to the city’s most successful developers to build thousands of units of luxury housing despite pleas from residents and housing advocates to include desperately needed affordable units. Today Lower Manhattan is one of New York City’s most expensive residential neighborhoods, and in our real estate market, that says a lot.

Despite promises made by then Governor Pataki and Mayor Bloomberg to downtown Manhattan’s lower income neighborhoods in May of 2005 and October 2006, the process of allocating an estimated $45 million in community improvement grants is sadly lagging.

Officials seem to be singing the same tune in Louisiana. It wasn’t until July of this year, upon realizing that only $97 million of the federally approved $7.84 billion in GO bonds for the state remained, that officials begin to even consider developing guidelines for the allocation of the remaining bonds. State Rep. John Alario told the Times-Picayune that some of the projects that have been approved for $50 million to $100 million have created only one or two permanent jobs, while other, lower bond issues could create a few hundred. In the same article, Rep. Charlie DeWitt noted “We didn’t think we would spend all this money…In retrospect, we should have been looking at the number of jobs…”

And as has been the case with New York’s allocation of Federal resources, GO Zone bond funding in Lousiana has not gone to the communities most in need. Earlier this month a Times Picayune article reported that New Orleans' recovery director “suggested” that the GO Zone bond program has resulted in a windfall for developers outside of New Orleans, in some of the least damaged parts of the state, and that a number of these projects have had little to do with hurricane recovery. New Orleans, in contrast, has thus far seen only one GO Zone project approved for funding – at $4.5 million, 0.1 percent of the total $4.5 billion in approved projects.

In order for recovery efforts to truly help those who most need it most, processes must be established prior to the creation of programs to make them transparent and accountable. Going forward we need to make sure big business interests aren’t prioritized over broader community needs in the wake of a crisis.

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Posted at 8:00 AM, Sep 01, 2007 in Government Accountability
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