NEW YORK--(BUSINESS WIRE)--The lump sum payment from the Federal Emergency Management Agency (FEMA) to New Orleans should provide additional timing and project staging flexibility in addressing the city's infrastructure needs, Fitch Ratings says. New Orleans announced last week FEMA will provide a $1.2 billion lump sum settlement to the city to fund remaining repairs of damage inflicted by 2005's Hurricane Katrina.
Most of the city's current $325 million five-year general government capital plan is earmarked for streets and related projects and already comes from FEMA. The city is complementing that funding with GO bond proceeds from a $105 million 2004 authorization. The $1.2 billion settlement will allow the city to more aggressively and efficiently address a huge backlog of needed street repairs. City officials claim that Katrina caused total street and related repairs totalling $9 billion.
While most of the settlement will go toward road and drainage projects, approximately $129 million will fund projects at the Sewerage and Water Board. Fitch upgraded the Sewerage and Water Board's water revenue bond and sewerage revenue bond ratings last month as it has shown progress in accelerating funding critical capital needs and improving financial metrics resulting from annual rate increases. The board has identified a combined $740 million in capital projects at the water and sewerage systems over the next five years.
Much of New Orleans' work to repair damage from Hurricane Katrina has been funded by FEMA reimbursements. This settlement will provide the estimated remaining recovery funds needed by the city. To date, FEMA has approved just over $775 million in funding for road, drainage, and water and sewer repairs. Historically, approvals were for specific projects that met FEMA's criteria to fund repairs that restored the condition of a specific asset back to its pre-storm level. The United States National Oceanic and Atmospheric Administration's National Weather Service estimated that Katrina's total damage was approximately $108 billion (2005 dollars).
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