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In a long-awaited move that could free tens of thousands of New Orleans area homeowners from rebuilding purgatory, federal officials on Wednesday released new elevation recommendations for reconstructing flood-damaged homes or building new ones.

The standards go hand-in-hand with future plans for rebuilding and improving the levee system, also announced Wednesday, along with a White House commitment to seek an additional $2.5 billion to pay for them. Gulf Coast rebuilding czar Donald Powell said that money, which still needs congressional approval, would finance solid flood protection for 98 percent of the New Orleans metro area — in other words, everywhere but lower Plaquemines Parish.

The announcement included one surprise: Because of ongoing improvements to the flood protection system, the base flood elevations for the New Orleans area inside the levees, last adjusted in 1984, were unchanged. Many homeowners had feared dramatic increases in minimum elevation standards after Katrina’s floodwaters inundated the city, and preserving the current elevations is an indication that federal officials viewed the flood as caused by problems with the levee system, not an overpowering storm.

“This will enable people to get on with their lives, seek building permits, get flood insurance and ask for mortgage applications,” Powell said at a news conference at FEMA offices on the West Bank.

But because of an additional “three feet above grade” proposed standard, however, thousands of substantially damaged homes may still face the prospect of being raised to remain eligible for the federal flood insurance program. Under the new elevation recommendations, homes substantially damaged by the flood would need to meet the current base flood elevation — a comparison of the home’s height to the expected water level in a 100-year flood — andbe at least three feet above “grade,” or the ground surrounding the house. Substantial damage is defined as repairs costing more than 50 percent of the cost to completely rebuild the home.

That means it isn’t enough to be at flood elevations. All new construction and repair of badly flooded home would feature at least three-foot piers.

The proposal is designed to reduce the potential for flooding from heavy rainfall or levees being overtopped. Its practical impact is to discourage building slab homes at street level, since those homes are the most vulnerable to flooding. Federal officials emphasized that the recommendations are advisories only and homeowners are not, at this point, required to follow them. While officials said they offer a smart way to rebuild, they are not requirements until local governments adopt them, a process that could take more than a year.

Once the guidelines become rules, their impact across the metro area could be substantial — for new construction as well as damaged properties. In Old Metairie, some of the area’s priciest and largest homes, if substantially damaged, would become subject to the “three feet above grade” rule, a near impossibity for many of the larger homes. More likely, they would be subject to higher flood insurance rates.While most of Jefferson Parish and St. Charles Parish avoided the kind of catastrophic flooding that would invoke’s FEMA’s 50 percent rule, the advisories and maps to follow will shape the future of building in those parishes. The advisories encourage new construction to be on piers, and the teardown frenzy that resulted in modest slabs homes being replaced by massive two story houses built on grade could disappear.

In St. Tammany, the overwhelming majority of residents would not be affected by the new standards, said Planning Director Sidney Fontenot. In areas west and north of Interstate 10, which is most of the parish, the advisory simply adds one foot of elevation in the areas that suffered flooding. � A second announcement Wednesday applied to lower Plaquemines Parish, and recommends that homes outside the levee system be raised an additional one to three feet above the 1984 elevation standard. However, Powell acknowledged that the White House is not seeking the $1.6 billion in additional money needed to certify the levees in the lower part of the parish.

Moving forward

The release of the elevation standards will allow homeowners, previously paralyzed by a lack of clear rebuilding rules, to make realistic comparisons of the cost of renovating their homes, tearing them down to build new homes, or taking a federally-funded buyout and walking away.

FEMA did not release detailed flood elevation maps, but rather set guidelines that will be used in the drawing of those maps. The upshot of the announcement is that tens of thousands of New Orleans homeowners, particularly owners of slab-on-grade homes, may ultimately have to either raze or raise their properties or face annual increases in flood insurance premiums.

Still, those owners of substantially damaged properties who have enough insurance money to make repairs can legally go ahead before the new standards are adopted and only must meet the current base flood elevation requirements. The additional “three feet above grade” proposal is only an advisory, although it is recommended. In addition, the Louisiana Recovery Authority may require it be met by those homeowners seeking state assistance to rebuild.

In the past, slab-on-grade properties resting below the minimum elevation qualified for discounted flood insurance because they were “grandfathered in” — built before the city joined the program in 1975 — and had never been substantially damaged by a flood. Now, any home classified as having more than 50 percent damage will lose that subsidy and be subject to steep flood insurance hikes unless they raise their home. Based on the 1984 maps, the majority of badly flooded homes will have to be raised between 2 to 6 feet to meet base flood elevation requirements.

The new guidelines will have massive impact on homeowners in flooded neighborhoods: About 75 percent of the 85,000 homes in Orleans Parish with flood insurance don’t meet current elevation requirements, according to previously released FEMA data.

Those homeowners could use a variety of federal grants to mitigate those costs, however, including grants of up to $150,000 — minus payments they’ve already received from insurance — which they could put toward rebuilding the home or take as a buyout, essentially selling the property to the government.

Homeowners also can tap into a separate federal program that provides up to $30,000 to defray the costs of raising their home.

The advisory elevation standards may determine whether residents can collect on that money. Sean Reilly of the Louisiana Recovery Authority, the panel that will hand out the proposed $7.5 billion in federal rebuilding grants to homeowners, said the authority is strongly encouraging homeowners to comply with the new elevation standards.

In its strictest sense, the new elevation advisories are aimed only at homes determined to be more than 50 percent damaged and also at new construction. The LRA has yet to set clear rules for homeowners with less than 50 percent damage who hope to get renovation grants.

Those homeowners may remain eligible for grants even if they don’t meet the new standard, but the LRA plans to conduct a cost-benefit analysis on the prospect of raising the home first. If elevation makes sense, the authority will require it; if not, the authority will still offer renovation grants even if the home does not meet the new elevation standards, as long as it has less than 50 percent damage.

Safety from future flooding should guide homeowners, LRA officials said.

“We should discourage people from taking that action that might seem like a short-term win, but is really a long-term loss” because of future flood risk, heightened insurance premiums and lowered property values, Reilly said.

But the new elevation standards are not as draconian as some had feared, a good sign for the prospects of redeveloping flooded neighborhoods.

“That means it’s going to be viable to rebuild in more places,” he said.

Stopping future floods

The new elevation standards are a sign of the federal government’s faith in the planned reconstruction of area levees. The proposed elevations wouldn’t have saved most homes from the sort of catastrophic levee breaches seen during Hurricane Katrina. However, they would theoretically protect homes from rainwater flooding and levee overtopping.

Lt. Gen. Carl Strock, commander of the U.S. Army Corps of Engineers, said plans for the upgraded levee system would include the replacement of up to 36 of the existing 56 miles of floodwalls; armoring levees; building flood-proof pumping stations near Lake Ponchartrain that could be manned during hurricanes; and installing permanent floodgates along the canals that broke under the weight of Katrina’s storm surge.

The entire system, he said, would be completed by 2010. By June — when the hurricane season begins — he committed the corps to repairing existing levees to “pre-Katrina levels,” with the addition of temporary floodgates on the canals.

Strock’s announcement came on the heels of his recent admission that a federal “design failure” caused the 17th Street and London canal levees to breach during Katrina, confirming assessments made by state and independent engineers months ago.

“By 2010, we’ll be able to truly say that the levee system will be better and stronger than it’s ever been,” Strock said.

Recently, the Corps announced it would take an additional $5.9 billion to repair levees — beyond the $3.5 billion already committed. On Monday, officials downgraded that estimate to an additional $4.1 million.

To get to the lower estimate, the Corps canceled the replacement of more than 20 miles of canal floodwalls, a savings of $700 million, because floodgates will be installed at the mouth of the city’s three canal, presumably stopping any storm surge before it could threatened the interior floodwalls. Secondly, a “more refined analysis” showed that the amount needed to raise levees can be accomplished at two-thirds of the original cost estimate, according to federal officials, and also reduced the estimate of incorporating some non-federal levees into the federal levee system. Those changes combined to reduce the estimate by another $1.1 billion.

Powell, speaking with the backing of the White House, said the $2.5 billion committed on Wednesday — which still must win congressional approval — excludes the $1.6 billion estimated cost of protecting Lower Plaquemines Parish, a project that remains uncertain. Powell said that decision would be based on a further study of its cost-effectiveness.

Plaquemines Parish President Benny Rouselle took that as a bad sign: The federal government appears to be backing away from spending such a giant sum to protect a comparatively small population. Indeed, Powell and other officials at the news conference emphasize that the area accounts for only 2 percent of the metropolitan area’s population.

“I’m a little wary on whether they are going to make the commitment at this point,” Rouselle said.

Powell’s much-anticipated announcement got mixed reviews from Louisiana’s delegation in Washington, D.C. and from local officials. Both praised the step forward but questioned the lack of financial details and a firm commitment from Congress on either the $2.5 billion levee money or the $4.2 billion proposed for renovation or buyout grants to homeowners. Some also vowed to fight for including lower Plaquemines Parish in the levee reconstruction project.

“New Orleans and South Louisiana residents can now move forward with their lives and make tough decisions about rebuilding,“ said Rep. William Jefferson, D-New Orleans in a news release.

Left unresolved, lawmakers said, was whether Louisiana would have to shoulder 35 percent of the extra levee costs, which could tally up to nearly $900 million. Also left unclear is when the federal check might arrive. Powell shed little light on either concern. In a written statement, he said he had just begun talking with members of Congress about how next to proceed, and that no decision has been made on the state’s share of levee financing.

Louisiana lawmakers suggested the direct approach: Tack a request onto the fast-moving supplemental spending bill for hurricane relief and military operations in Iraq and Afghanistan. The House approved $92 billion and a juiced-up $106 billion bill is pending in the Senate and could get a vote by early May.

Sen. Mary Landrieu, D-La., offered a vivid metaphor for the federal promises. “It’s like the man who throws you a 30-foot rope when you are drowning 50 feet from shore and says he’s gone more than halfway,“ she said in a news release.

Last week, Landrieu placed “holds“ on 27 presidential nominees to the executive branch until the administration took “significant“ steps toward delivering hurricane protection for South Louisiana. Overriding her would require 60 votes in the Senate. She said yesterday that Powell’s announcement didn’t satisfy her that she should back off.

In Baton Rouge, the reaction to Powell’s plan was more favorable. Reilly, vice chairman of Gov. Blanco’s said the White House should be “commended“ for supporting $2.5 billion in levee work.

“I leave it to the delegation and the White House to figure out how to secure it,” Reilly said.

As for lower Plaquemines Parish, Reilly said he understood the administration’s reluctance to move forward with higher levees when other hurricane-protection strategies might work better. “It may be that a dollar spent on coastal restoration may be more effective than a dollar spent on levees in Plaquemines Parish,” he said.

In New Orleans, Mayor Ray Nagin applauded the commitments but expressed similar caution about counting the home-rebuilding and levee construction money before the checks arrive. “This is the latest and greatest,” he said. “They say they’re going to fight for us ... The money? When it’s going to come? Who knows?”

In hard-hit St. Bernard Parish, Department of Community Development Director Mike Hunnicutt said the new federal guidance could affect as many as half of the parish’s 26,000 flooded homes, though its too soon to tell.

“It’s a confusing advisory that must be reviewed to see how it will impact homes,” Hunnicutt said.

End of an era

The new elevations could sound the death knell for slab-on-grade construction, used on thousands of homes in the city’s newer neighborhoods, such as eastern New Orleans, Lakeview and Gentilly.

Edward Miller, a professor of economics at the University of New Orleans who received his doctorate for studies on cost-benefit analyses of water resource projects, said that essentially “outlawing” slab-on-grade houses makes sense in some parts of the New Orleans area but not in others.

For instance, Miller doesn’t believe new homes on high ground — for instance, near the Mississippi River in Jefferson and Orleans parishes — need to be built 3 feet above grade on piers because they’re unlikely to flood.

Miller also noted that the new advisories essentially retain the base flood elevations established in 1984, which means that they essentially ignore drainage improvements that have been made since then. Over that time, some neighborhoods — Broadmoor, for instance — should be less prone to flooding now than they were 22 years ago because canals have been widened and pumping stations have been strengthened.

“It looks like they’ve just written that all off, which seems wrong to me,” Miller said.

The new elevations apply to all houses determined to have sustained more than 50 percent damage. Initially, FEMA inspectors set those percentages, but residents have the right to appeal that assessment. Thus far in New Orleans, the city appears to have been generous in granting reductions requested by homeowners seeking to avoid the expense of raising their homes, agreeing with residents in 90 percent of the appeal cases.

Owners of houses on piers will fare far better, said Diana Herrera, a flood insurance expert with FEMA, but not all would escape the prospect of raising their homes.

The owner of a badly damaged Gentilly home built in the 1930s and sitting 6 feet below sea level, for instance, would have to raise it, even though it already sits on three-foot piers. That’s because, while the home would meet meets the three-feet-off-the-ground standard, it still sits well below base flood elevation, and thus would have to be raised an additional three feet to meet the standard set by 1984 flood insurance maps.

If the owner didn’t lift the house, he would get socked with a flood insurance bill of about $3,000 annually, compared to about $700 a year before the flood. Flood insurance premiums can increase as much as $1,000 for each foot below the minimum standard.

That obviously would create an incentive for homeowners to appeal their assessed damage percentage. Owners of houses determined to have less than 50 percent damage would continue to be grandfathered into subsidized flood insurance rates — even if they don’t meet the new elevation requirements.

LRA and FEMA officials have discouraged that practice, however, saying that gaming the damage-percentage system will only bring more financial headaches to homeowners in the long term.

“If you’re tinkering with the damage percentage, you’re tinkering with your mortgage-ability, your insure-ability and your property value,” Reilly said. �

Jeff Meitrodt, Gordon Russell, Karen Turni-Bazile and Bruce Hamilton contributed to this story. (Brian Thevenot can be reached at bthevenot@timespicayune.com or at (504) 826-3482.)