A recent study found the city was in a bad financial situation prior to the storm, and now its financial situation is more dire than it was just as the hurricane struck.
The city had a surplus in 2014 and a $5.2 million surplus in fiscal 2015, both of which were used to build the city-owned hotel. Then the hotel didn’t work. In September, the city lost $12 million on the hotel, and since then, revenue has dipped, and has remained flat even though the city’s total cost of the project hasn’t changed since the storm.
A year ago, the city’s board of directors recommended the hotel be moved out of town, so the city turned to consultants to analyze options. The consultants had a price tag of $1 million.
When the city discovered that the city’s costs were too high, they reduced the estimate by half, by more than $700,000. (In addition to the $13 million it had to pay for other projects related to the disaster, it was also having trouble paying the tax revenue from new hotel rooms. So, the city turned to a company to help with the revenue. A company called SustainCity had the contract to provide services to the city.)
That’s because one of the main issues with the hotel was how it was constructed.
“The storm destroyed the roof, basically,” said David Crouch, the city’s Director of Infrastructure Services, who recently took over for former Police Chief James Sinegal. “Some of the construction techniques that were used then have to be replaced.”
The problems with the roof aren’t too serious as far as a storm is concerned, said Crouch—until it rains. In New Orleans, when a hurricane blows it down, it’s a mess, with broken windows.
But the city needs to replace the roof because if it’s in bad shape and the city’s infrastructure is in bad shape, then the city is essentially paying for other people—like hotels—who might have a different understanding of infrastructure, said Crouch.
“If it wasn’t for those that we can’t afford the maintenance of, the city would have had a problem with the property.”
How much money was lost from the Secretariat?
The city’s General Fund budget only pays for the hotel. When it’s empty, it also pays for utility bills and police overtime.
Now the city has to pay for security. Security costs could total as
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