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LaGrange Estimates Port Will Need $1.7 Billion

Based upon post-Katrina engineering and other studies, the Port of New Orleans estimates that $1.7 billion will be required to rehabilitate, replace and/or improve port facilities damaged by Hurricanes Katrina and Rita, Gary LaGrange told a the Senate Committee on Finance.

LaGrange, is president and Chief Executive Officer of the Port of New Orleans, and chairman of the American Association of Port Authorities (AAPA). He addressed the committee on September 28.

"Hurricane Katrina struck an unprecedented blow against New Orleans and other areas of the Gulf Coast. The New Orleans area has been de-populated, leaving no revenue base for some municipal bondholders to rely on for repayment. Legislation is needed to help make payments and ensure adequate access to capital markets in the future. Federal guarantees must be allowed behind certain municipal bonds to allow tax exempt borrowing for needed reconstruction. In addition, temporary and limited relief should be granted from provisions of the tax code related to tax exempt bonds which normally inhibit their issuance. The port also believes that limits on bonding caps (for public or private entities) for the region should be waived," said LaGrange.

"The Port of New Orleans is the primary economic engine for the region - and if the port returns to full operations, the region will soon follow. With repaired port and intermodal infrastructure and a return of the workforce, the port will be a major factor in the business and economic revitalization so desperately required for the Gulf Coast region," he said.

"Within a one-month span, Hurricanes Katrina and Rita have impacted over twenty ports in the Gulf of Mexico that are members of AAPA, and many additional private and public ports in the region," LaGrange told the senators. "The impact of these hurricanes has varied, with the largest impact on ports in Louisiana, Texas, Alabama and Mississippi. For several ports, including New Orleans, the impact has been considerable; some of the facilities may need to be relocated, and it will take months if not years to fully recover. In New Orleans, for example, we are only 20 percent operational," he said.

"The Port of New Orleans serves as the focal point for waterborne transportation of cargo to 28 states. That cargo activity supported $37 billion in economic benefits to the country and generated $2.8 billion in federal tax revenue," he said.

Agricultural products from 17 Midwestern states flow through the Mississippi River. Over half of the grain exports for this nation depart from ports impacted by Katrina. Oil, agriculture and chemicals rely heavily on the infrastructure provided in these port areas. Gulf ports serve as one of the nation's largest gateways for poultry exports, and the inability to handle frozen poultry products through unique dockside facilities would increase shiping costs by $7-to-$8 per ton, making U.S. poultry products extremely noncompetitive in the international marketplace, he said.

Diverting steel imports from New Orleans would increase costs by an estimated $80 to $90 per metric ton because of delays and reduced access to inland barge and rail transportation systems. Cruises provide significant tourist trade, jobs and income for New Orleans and the region, and depend heavily on the ability of New Orleans to rebuild, said LaGrange.

Ports are particularly vulnerable to hurricanes because of their locations in coastal areas, he said. In recent years, U.S. ports have also been shut down by earthquake (Oakland in 1989) and terrorist attack (New York/New Jersey in 2001).

Important to the port's recovery are: quickly reopening the channel; restoring communications; getting a power source (electrical or fuel-generated); manpower; and repairing facilities and intermodal connections (reliable truck and train traffic), he said.

LaGrange commended the agencies that helped ports in the aftermath of Hurricane Katrina. The Maritime Administration (MARAD) diverted military ready reserve ships to help ports open quickly, he said. Marad provided a ship in New Orleans where workers could live, since much of the city is still uninhabitable. The ship also had cranes and the ability to generate power for the port.
The Coast Guard, the Corps of Engineers, and NOAA surveyed channels, identified obstructions, reinstalling aids to navigation, and providing emergency dredging.
The Federal Emergency Management Agency (FEMA) directs many of the federal activities and helps reimburse ports for rebuilding.

"Hurricane Katrina completely shut down the Port of New Orleans," said LaGrange. "The port has limited electricity, water, sewage and other services, and its terminals and facility were severely damaged by both storms and subsequent flooding. (This) affected the economy of Southeast Louisiana, and the entire nation. In 2004 alone, more than 380,000 jobs in the U.S. were dependent on the cargo activity at the port", he said.

"In the immediate aftermath of Hurricane Katrina and Rita, the Port of New Orleans has been working non-stop to restore its facilities and services, and is still struggling with a limited workforce and ability to move the cargo in and out of the port. Intermodal connections, such as truck and train, are still a challenge for New Orleans and ports in Mississippi and Texas. The roads and rails need to be repaired and/or rebuilt, and workers need basic housing in order to work long-term. Recovery is tied to the problems of restoring the entire city.

Without adequate infrastructure for housing and family needs, workers will not be able to return. Cruises will wait to return until hotels and tourist attractions are restored, he said.

Another challenge will be cleaning up the ports. In addition to wind damage, spoiled cargos must be disposed of and storage sheds must be replaced or repaired, he said.
Getting the port back in operation will help the economy of the entire area recover by providing a means of bringing in the materials for repair and reconstruction. Any rerouting of traditional port cargoes would increase related supply chain costs, such as trucking and rail services, barging, distribution and warehousing, and ocean freight.

AAPA member ports most severely affected by the hurricanes have reported the the following services by the Corps of Engineers are the most necessary for recovery from catastrophe:

1.Pre-position generators to service public ports to restore trade quickly;
2. Repair and restore jetties damaged by storm events, and provide safe entry;
3. Provide engineering analysis of damaged and remaining structures at public ports;
4. Revise legislation which limits the Corps' ability to accept FEMA funds and additional missions.

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