[Eidolon]

http://www.reuters.com/article/2012/...8A203G20121103

Insight: Flooded New York plans to tame the sea, but who pays?
By Greg Roumeliotis
NEW YORK | Sat Nov 3, 2012 1:13am EDT

To many New Yorkers, Sandy's destruction came as a shock. But to scientists, engineers, environmentalists and public officials, this was a tragedy waiting to happen. A 2007 study by the Organization for Economic Co-operation and Development ranked greater New York second among the world's large port cities most exposed to coastal flooding based on the value of their property.

"People have said for many years - specifically since Hurricane Katrina hit New Orleans - that New York City was prone to such a super storm," New York City Comptroller John Liu said on Thursday.

Still it took Hurricane Irene in August last year for the city to seriously start exploring a flood plan, according to Aerts, who said the city asked him to develop a comprehensive cost-benefit analysis for a flood strategy.

After Sandy, the momentum behind such a plan is set to build. Andrew Cuomo, governor of New York state, said this week that infrastructure will need to be re-examined and reinforced.

But it is not clear how New York will pay for it, and it may well take an act of Congress to prevent the next act of God from bringing the world's financial center to its knees again.

"We have to weigh our damages against the cost of building such a levee system," said Liu.

On paper, New York City has the capacity to borrow more to spend on infrastructure. The latest relevant report from Comptroller Liu's office projects the city to be $18.28 billion below its general debt limit by July 2013 and $18.74 billion by July 2014.

"I don't see tight debt capacity as a hurdle down the road," said George Friedlander, chief municipal strategist at Citigroup Inc.

Federal money may prove key to any major flood protection program. This would mean negotiating funds with Congress rather than relying on the Federal Emergency Management Agency, which reimburses states and cities for recovery projects. And getting that kind of money is going to be increasingly difficult given the lack of consensus in Washington on how to handle the U.S. government's large budget deficit and soaring debt.

"We have to get a long-term commitment from the federal government to put money up, which can be contingent on the state and local governments producing a significant match," said former Pennsylvania Governor Ed Rendell.

Rendell, a major advocate of private sector involvement in infrastructure finance, argued that public-private partnerships could be part of the funding mix for such projects.

Even though something like levees would be not be revenue-generating, private ownership or management was still an option, said Raj Agrawal, head of infrastructure for North America at investment firm KKR & Co LP.

"If you get this under private ownership or private operation, you can certainly raise more capital than you could in the bond market by getting a capital infusion of funds from a private party," he said.