Monday, March 31, 2008

Fortress Terrebonne


[Thanks for all of your comments, even the ones that I found inappropriate for this blog. My ideas here are just my thoughts as a voter, and clearly do not reflect the views of any political client of Axiom S.A. In fact, I really did just throw this out there, just to get people talking and to encourage them to devise their own ideas...I will leave this post active for a few more days. Definitely feel free to keep your comments coming on this subject. I'd love to hear them.]

On Friday evening of last week, after a long day of work, I followed my typical routine of checking late emails and visiting a few newspaper websites. One of them was the site of the Houma Courier. Though I haven't lived in that Louisiana town for a while now, I still think of the place as "home". It is, after all, where I grew up, and my mom and many of my friends, as well as a number of Axiom S.A.'s first clients, still reside on or near the bayous that course through that parish. Therefore, I try to pay attention to as much news coming out of Houma-Terrebonne as possible. And so it was, on that particular Friday, I noticed that the unique topography of the region was once again a top headline of the local news.

The subject of this story, more specifically, pertained to the fact that FEMA planned to issue ominous revisions to its flood maps for the parish. Now, to be sure, its first series of post-Rita maps were ominous enough; however, according to the Houma Courier, the new flood maps "put the entire parish in a flood zone". Whereas the last series of maps projected that large amounts of water would inundate parts of the city of Houma, as well as broad portions of its outer environs, these new maps imply that virtually no place will be safe in Terrebonne Parish.

Most of Houma's officials seem taken aback by the prospects of these revisions, just like so many residents are now, as they all calculate the impending effects on real estate valuation, future development and flood insurance policies. Indeed, this is not an easy pill to swallow. And while many can protest the new maps, the reality of the situation remains the same: subsidence, erosion, salt-water intrusion, and rising sea levels have conspired to make Terrebonne Parish exceptionally vulnerable, and the impact of future storms on this unprotected region only make matters worse.

I can remember poring over the first series of FEMA Advisory Base Flood Elevation maps (ABFEs) with a friend, a Houma native and IT consultant. We diligently surveyed the grids, looking for street after street, and occasionally commenting about the expected tidal inundation in certain areas. We noticed that nearly all of our families, friends, and clients, according to those maps, would, in fact, face massive property losses. What's more, for those who would not, the situation was still grim, because the inundations would make an immediate return to Terrebonne Parish very difficult. According to the maps, the city of Houma would be vastly crippled by a Rita-type storm, should its eye pass near Morgan City, and the lower bayou communities would drown. The aftermath of the tropical event, according to the data from these maps, would resemble the 2005 tragedies in Cameron or Chalmette.

Accepting these projections for what they are now leaves us with a litany of questions. The first among them is, of course, what are the people of Houma supposed to do? Well, everyone knows the answer to that one. Terrebonne Parish needs to build levee fortifications strong enough and high enough to stand against the brunt force of a tidal surge. Simple enough, right? Well, while that makes sense, determining who should pay for such complex fortifications is a more difficult question to answer.

I have long contended that the leadership in Terrebonne had to make an absolute effort to lobby Baton Rouge and DC for the funds necessary to protect large portions of the parish. In fact, I never believed that the taxpayers needed to endure any additional burdens, and I argued vehemently against a 2006 proposal to raise taxes for the creation of a levee authority. These days, however, that belief might be changing. The fact is, neither BR or DC are running with the aid of the Houma's metro region--a region, mind you, so vital to the continuity of America's domestic energy production. And that being the case, even stubborn capitalist like myself has to admit that, like many times before this one, Houma is one its own.

Now, just for the record, even saying that a government, any government, needs to promote the passage of a new tax is not something that rolls off of my tongue easily. However, it is important to recognize that there are times when governments do need to act and must be given the necessary rescources to do so appropriately. This is one of those times. For one thing, while there is much admiration for business, the private sector is ill-equipped to unite and meet this challenge on its own. And secondly, only government has a successful track record of marshalling resources, then utilizing them for the common good of all the people through big projects such as this...Just remember the Tennessee River Valley initiative, NASA, or even the interstate highway system.

No matter how clear or present the danger, most people still will not be convinced that a new sales tax will be the right thing to do--and out of fairness, who would blame them? After all, the people of Terrebonne have seen enormous amounts of money squandered on studies, and that is to say nothing about the sales tax monies intended for the Morganza-to-the-Gulf project. In order to get people to open their wallets a bit further when asked to build these fortifications, government leaders will need to do more than proffer empty lip-service; they will need to demonstrate, through their own actions, just how much of a massive priority this new tax is.

That said, here is a little advice for the consolidated government to consider from just another lowly, hyperactive consultant, if it chooses to listen, and if it does, quite wisely, opt to engage its citizens with a proposal for new taxes:

First, we have to remember that politicians who run on pro-business platforms never make good mouthpieces for new taxes, particularly when they still seem to be working within the strictures of their political philosophy. This usually leaves voters confused and disheartened. Hence, politicians like the current parish president and a few members of the parish council will have to really do their part, remembering that it is not just about spin (though that is one part) but about action. The best way to prepare voters for a collective change-of-mind is by raising the level of priority in a compelling way, well in advance, and the first action of this government should be in its 2009 budget.

The 2007 O&M budget for the Terrebonne Parish Consolidated Government was in excess of $170 million, and that was a double-digit percentage increase from the preceding year. Even today, while it may pale in comparison to the budget of a city like Lafayette, the TPGC budget does dwarf those of its neighbors like Lafourche, Assumption, and St. Mary. By maneuvering a sizable portion of the 2009 budget in a manner that does address fortification priorities--say 25% to 33%--the administration and council will be sending a clear message to its constituents. "Sure, new boardwalks or sports complexes are nice," the leaders might say, "but they will be of little use if they are resting under feet and feet of water...Better that we reallocate these monies to our more immediate needs. Then, when we have those protections, we can make recreational and non-essential development investments."

In this budgetary shift, a governmental reorganization should be pursued. The current levee board functions as a quasi-independent entity with very little effective oversight by the administration. This is not necessarily a bad arrangement, insofar as it keeps the entity from becoming too politicized. However, this approach has also left much to be desired, in the way of professional expertise and accountability. This has to change, and a choice has to be made: either the parish government assume authority over, as well as the development and maintenance of, all levees; or this board must be properly staffed with engineers and more protocols for accountability must be imposed, as it assumes the control over all levee projects...The current model is no longer effective. (Such an approach might require a legislative change by the parish council, and so, no one should convince themselves that it will be an easy task. It might take some time to get beyond the usual spate of political rigors.)

Beyond this, and knowing how immediate the needs are, the administration will need to work closely with underwriters and insurers for a series of bond issuances. This will allow the government to raise the funds needed to begin its work. In issuing debt, the parish government should consider two purposes for the bonds. Naturally, the first type of bonds will be used for the construction of the fortifications; however, the second type should be catastrophy bonds. The latter are risk-oriented instruments intended for the protection of assets or operations. In this form, the parish government, fully recognizing that a storm can beset the parish at anytime, would issue the bonds to investors, and utilize the proceeds to sustain government operations, in the event that a catastrophic storm does make landfall and its tax revenue sources are crippled. (Should no storm actually hit during the given life of the cat bonds, then the parish government returns the proceeds to the investors.)

All of this will take months to put in place, but once the bulk of these three efforts are successfully executed--the "re-priorization" of budgetary spending, the creation of a professionally-ept levee authority, and the issuance of bonds--the administration will need to talk directly to the people.

It is important for voters to understand that the administration is determined to address the threat posed to the parish, but given the high cost of fortifying the coastline, the parish government will have additional resource needs. "Those needs, as large as they are," the parish president might tell voters, "will require an investment, and not a sacrifice, by all of us...It is an investment in sustaining our way of life, an investment in protecting our communities, and an investment in a future for our children, so that they, too, will have an opportunity to call this parish 'home'." By helping the people to understand that they are making an investment, and that their government is also doing its own part, getting them to the polls to vote affirmatively on a new tax will be less difficult.

One benefit of this project that leaders should remember to articulate is its likely economic impact on the local economy. When governments embark upon such large-scale endeavors, the Keynesian model of growth kicks in. In the short term, the government spending on the project will flow into the private sector and to the workers, then indirectly into the broader economy. Put simply, just building the fortifications will offer economic stimulus and, hence, replenish the government's own coffers. (And with any luck, the government will begin to use these revenues to pay down its debts.) However, the parish government must take care to initiate this project correctly, because simply hiring old friends to perform this work will neither be acceptable, nor will it generate the desired economic effect. Consequently, the government must be open, objective, and transparent in its selection of contractors, inviting everyone from the likes of global titan Nahkeel to much smaller T. Baker Smith to bid and work on the fortifications, so as to insure their quality and longevity.

And that brings us to the long-term benefits. The presence of these fortifications are essential to keeping Houma and the rest of Terrebonne Parish viable and competitive. In fact, for at least as long as the energy markets remain heady, the oil patch will continue to hum. So too will South Louisiana's shipyards and oilfield service facilities. That has been to Terrebonne Parish's benefit; yet, in order for that economic development to continue, or even be bolstered, businessmen--even those beyond the oil industry, and much like any other group of citizens--will need assurance that their investments will not be grossly submerged. Of course, the levee fortifications, in the long term, will afford them some confidence, and there is no doubt that insurers will be equally pleased.

To be sure, this strategy is not the perfect solution. In fact, I openly admit that it does come with its own caveats, and I can think of at least three, immediately. First, I never said a word about the arduous issue of determining the alignment of the levees. Well, the politics of that matter notwithstanding, I will gladly leave that to smarter and "more vested" folks. Secondly, I cannot speak to the cost of constructing these levee fortifications, and I have not forgotten that the financial markets are in the tank. With respect to the latter, it's my professional belief that the financial markets will be in recovery by the fourth quarter of next year, making it better timing for a hefty municipal bond issuance. And lastly, we all know that no fortress is totally impenetrable; flooding will still occur. That's where the parish government has to do its part to maintain its drainage capabilities.

I have always said, and will always say, that Houma was a great place to grow up, and that, as a city, it still embodies so much potential. In fact, now it has a few leaders who not only recognize that potential but are intent on capitalizing on it. Nevertheless, they should also take the time to understand its challenges. If DC and BR will not step up to help Terrebonne Parish, then the people of the community must do it for themselves. And though many will not want to embark upon this costly endeavor, they should be reminded that a tax is nothing more than an investment--the greatest investment that will ever be made in a parish that deserves a fighting chance.

---gh

15 comments:

John said...

G-man supporting taxes? It has to be snowing in hell!

Wisenhunt said...

A little advice? Gary, you have obviously given this one a lot of thought. From the sounds of it, it might be a good idea. Can't be sure the people who are going to be happy on all that debt, though. Just Morganza is supposed to cost a billion. That's a lot of money.

Digger (Las Vegas) said...

Man, what the hell! You write too much!

Your idea is good but will never happen. Even if you build your "fortress", Houma is probably just going to become an island anyway. No offense, bro, but people know there's not much anybody can do to keep that part of the country safe.

Nick said...

Is this a sample of your first stump speech, Gary? If I didn't know you, I'd think you were running for office. But I think this is a good idea and you probably need to share it with the right people.

Matesh Shah said...

gary, hey, good to say you writing again. very interesting idea. you won't be a republican for long talking about new taxes. lol.

Anonymous said...

very smart, man. keep it up.

Kayla said...

Gary,
Perhaps this is the kinda thing that'll get people talking (if they take the time to read it). Unfortunately, you know that most folks ain't interested until something goes really wrong. So the question is, how do you get Joe Voter's attention?

Kayla

Anonymous said...

It ain't a bad idea but you need leaders who got some fight in them. I don't know if we got those kind of people here. Claudet is good, but is this something he would fight hard for? And we are always helping each other down here. But we need help from Congress now. We need to keep telling them how hard we work to produce their oil and how much money they make on us. They need us like we need them now.

Anonymous said...

Interesting blog, a lot of real good stuff here. Never knew the US debt was that high. I'll certainly be checking this site out from time to time. Keep up the good work, man.

Anonymous said...

NO NEW TAXES!!!

Anonymous said...

I would not support a tax. But the council needs to do something like this to get my vote. Thank you for convincing me, son.

Patrick said...

People are facing so many rising costs already. Food prices and energy price are up, and if you add a new tax on people that just takes those prices higher. The big problem, most people are not getting raises to offset those expenses. I understand that those areas down there need levees, but at the same time, I can see how people are not going to support a new tax. They just don't have the money to do so. It is sad, but it is understandable. No matter how you spin it, even people down there just cannot afford new costs at the registers.

Beth said...

Gary:
I know you are headed for politics. Posts like this comfirm it. LOL. Anyway, I saw that some people weren't supporting this idea, but I do. I think people forget that it takes tax money to build and keep up roads, schools, and even levees. It is not something we want to pay for, but you know we all benefit from it. You are right. People need to accept that this is the only way things are going to get better. I just wish people here in New Orleans got this smart.

Thanks for taking an unpopular position.

Oh, one thing: tell Digger to stop writing us off. No one down here constantly curses that desert he lives in.

Love you,
Beth

thinking man said...

Question: if Claudet and the council stop wasting money and change up the budget, do they still need to raise taxes? Won't they already have the money?

Anonymous said...

Quote from this post:
"First, I never said a word about the arduous issue of determining the alignment of the levees. Well, the politics of that matter notwithstanding, I will gladly leave that to smarter and "more vested" folks."

People pretty much know you don't think places like Montegut or Dulac needed to be protected. You wrote that in this blog on Dec 1, 2006. So do you think those people need to pay this new tax too?

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