Thursday, March 11, 2010

Understanding the Revolver

Anonymous has left a new comment on your post "Oh boy":

What I want to know is... who agreed to allow the City to use the revolver fund for non-reimbursable projects? Did the State agree to this use of the revolver fund? Did the City Council agree to this?

What I find odd is there was no mentioning or out cry when the rules governing the use of the revolver was changed. Did the City act alone?

From what I understand the protocol pretty much gave the mayor autonomy over projects to apply towards the fund. The only stipulation enforced by FEMA is that almost all of the funding must be used to repair existing infrastructure back to the level of functionality that it was before the storm.

In other words, we couldn't build a new wing on the Zoo, then try to get reimbursed by FEMA via the revolver. Or....we can't try to create an 80 million dollar...whatever it is...in the municipal auditorium which was vacant before the storm and expect the revolver fund to compensate us for that new development.

Now there is a small amount which can be allocated towards new development, but only a small amount.

City Council didn't have discretionary control over what was assigned to the revolver...so we can't really blame them. To her credit, Stacy Head has been ringing the alarm since last summer that we need to get a handle on the revolver before...well....exactly what Chrisman is claiming has happened.

So the issue is that Nagin really has autonomous control over what is assigned to the fund. He is not breaking any laws by assigning funds to whatever he chooses...we are just in danger of not being compensated for projects which he chooses if he is not meeting the requirements set forth by FEMA.

The other real issue is that FEMA wipes their hands clean of the money once it is dispensed.

For example, Nagin spent down 38 million in city funds to restore the Mahalia Jackson Theater...he ascribed 28 million of that expenditure towards the revolver. I doubt FEMA will compensate that amount because there's no question it was new development, but for the sake of our scenario let's say they do.

FEMA cuts the check for 28 million and after that....they walk away, they wipe their hands clean of what happens to that money. So if Nagin chooses not to replenish the city coffers with that 28 million....he could turn around and spend that money down on whatever he chooses and there really isn't a lot we could do to stop it.

The danger here is that Nagin could spend down a whole lot of money...I estimate up to 250 million (but that's just my amateur assessment) on the city dime and leave us on the hook for millions, maybe hundreds of millions.

If I've made any mistakes in my assessment here...please correct me.

The other thing I'm really worried about is if he's tapping the operating budget. I can't believe that is the case but I'd really like to know for sure.

Two readers have confirmed that he has not spent any revolver money on the Municipal Aud. deal as of yet, other than to pay MWH for consulting fees. It sucks that MWH got paid for that considering there really wasn't anything to consult on an inside deal, but at least we haven't actually payed Juneau anything from what I can tell.

11 comments:

NOLuvs said...

What about malfeasance in office? Surely someone cannot be irresponsible, irrational or malevolent with funds when there is a fiduciary responsibility, and there are no consequences

Superdeformed said...

Someone needs a hug. Come here big guy.

Editilla~New Orleans Ladder said...

Whew, for a second there I thought you were talking about the NOPD Sandwich Bag'lunch.

Anonymous said...

This could throw the whole population, the city itself, into a form of debt slavery: anyone who wants to move their person or their business to New Orleans would be voluntarily walking into that, in the form of higher taxes, etc.

Why do you think those Rust Belt cities look the way they do? Reading this, I'm getting deja vu all over again.

Anonymous said...

I don't know that there was malfeasance here, either. Sounds to me like most of the MWH contracts in question were staff aug type T&M deals. It's difficult to quantify exactly when you "need" another person to help in the office with your workload.

But when you have a bunch of likeable, competent MWH contractors in your office who are gently pushing you that whatever the latest development is really means you NEED more help...and hiring more help makes your job so much easier...and you have this big pile of money just sitting there...and there's no one applying any kind of fiscal pressure on you from above...

it's just really easy to say, "sure, I think we do need one more person."

Which is to say, yes, we probably are totally screwed...not so much from evil as from pure incompetence. That's what you get when you elect lazy, do-nothing imbeciles to run your city. People generally get the kind of government they deserve.

NOLuvs said...

Yes, you can say that in a democracy an electorate gets the government it deserves. That being said, I seriously doubt anyone would have voted for this gross incompetency (if that is all that it is). If there is no legal standard, the legal standard should be challenged, and it would be difficult to prove. But there should be a way to stop the insanity.

Anonymous said...

OK, so google the phrase "Ray Nagin's minions", and lots of stuff comes up.

We can agree at this point that Ray Nagin's minions are up to no good.

What I'm missing, and what would help me figure out what the #$%@ is going on, is if someone could provide a list of who these minions are, and the jobs they do.

lil'oya gave us a great list to start off with, but if there was a City Hall organizational chart or something, that would be helpful.

Who is working for whom, that sort of thing.

Anonymous said...

At New Orleans City Hall, on paper at least, Grant Monitoring and the relations with other levels of government is the responsibility of the Intergovernmental Relations people.

So who is in Intergovernmental Relations?

Who are the Mayor's Intergovernmental Relations people?

Anonymous said...

Kenya Smith's Office of Community Development deals with a lot of grants (like the $800k/$400k grant/loan given to Zulu/Zulu). And he's as big of a hack as they come.

Anonymous said...

Kenya Smith used to be the Mayor's Executive Assistant for Intergovernmental Relations, until his brief hiatus and his current gig.

Julie Schwamm-Harris is the deputy for that department.

I know one underling who has worked under both of those two, and I hope he'll start unburying bodies.

Anonymous said...

Really? MWH gets MORE money?

http://www.nola.com/politics/index.ssf/2010/03/new_orleans_extends_adds_perfo.html

How does it not matter that the company has admitted to U.S. Attorneys that it pays bribes to New Orleans officials?

How does it not matter that they've been paid over $30 million and there isn't much finished construction to show for it? Most of the street projects are through the state's Submerged Roads program, so MWH can't take much credit for any of that.

They should be paying us money back, not the other way. In five years the City will be blighted, but MWH will still be sending huge checks back to Colorado.