In late 2015, the city of New Orleans and FEMA resolved years of haggling over how much federal relief the city should get to rebuild the sewage systems, water systems and roads damaged following Hurricane Katrina. The settlement allowed the city and the Sewerage and Water Board to launch a roughly $2 billion roadwork project, heralded by then-Mayor Mitch Landrieu as a once-in-a-generation opportunity to make a dent in the city’s backlog of dilapidated and pothole-ridden streets.
But the federal deadline to spend the Katrina money is only 15 months away, at which time the remainder of the federal allocation could be clawed back. And so far, the city has only spent somewhere between 25 and 50 percent of it, meaning there is well over $1 billion left to use.
With the August 2023 deadline looming, it now appears that government watchdog offices, both at the local and federal level, are looking into the city’s management of the program, known as the Joint Infrastructure Recovery Request (JIRR) program.
New Orleans’ Inspector General Ed Michel confirmed his office will soon issue a report on the program. And records obtained by The Lens show that a former city employee was interviewed by an investigator from FEMA’s Fraud Prevention & Investigations Branch, a special agent from the U.S. Department of Homeland Security Office of Inspector General and the chief of criminal investigations for the New Orleans Office of Inspector General.
This isn’t the first time the city’s management of the program has come under scrutiny. Contractors on the project have criticized both Landrieu and Cantrell over the project’s slow progress. And a 2019 report commissioned by the city concluded that “drastic adjustments are needed immediately” to fix the program’s flawed processes and protocols that were simply being ignored.
Mayor LaToya Cantrell’s administration has made changes to the program since it took the reins of city government in 2018. In 2021, the administration significantly stepped up the pace of construction to try and beat the August 2023 deadline, but that led to its own problems, including widespread resident complaints about the proliferation of seemingly stagnant worksites.
And in recent months, both the city and its contractors have expressed serious concerns about their capacity to follow the city’s acceleration plan, which requires the Department of Public Works to complete nearly twice as many infrastructure projects this year as it did in 2020, and five times as many projects in 2023, according to a DPW presentation from late 2021.
“We have serious concerns about the ability to do that in the timeframe FEMA has given us,” Andre Kelly, communications director for the Associated General Contractors of Louisiana, said during a February City Council meeting.
It’s possible FEMA could grant a deadline extension, but that’s far from guaranteed.
“I don’t know if we’re going to get extensions or not for that,” a top Cantrell official, Joe Threat, said at a January council meeting. “If we don’t get extensions, whatever’s unspent will be deobligated by the federal government.”
Michel told The Lens last month that the next report his office releases will be on the JIRR program and whether there are “sufficient policies and procedures” in place.
“We’re just looking to ensure they have internal controls and that they’re operating effectively and efficiently and they’re communicating effectively,” Michel said.
Both FEMA and the DHS Office of Inspector General told The Lens they couldn’t comment on any investigation. And neither confirmed that there was an investigation into the JIRR program.
But the former city employee who spoke to them told The Lens that his interviews with the two federal agencies went beyond simple program inefficiencies and included questions regarding potential “theft of federal funds and misappropriation of federal funds.”
The former employee, who agreed to be interviewed on the condition of anonymity, said that with all three agencies, the main discussion topic was allegations regarding the city official who is now in charge of the JIRR program — Khalid Saleh — and a major contractor for the program that employs his son — Lufti Saleh.
Khalid Saleh has a direct hand in doling out engineering work for the JIRR program. And as of May 2021, the contractor, ILSI Engineering, was one of the top paid engineering firms for the project with roughly $4.8 million worth of work, according to contracting data obtained by The Lens. The city confirmed that Lufti Saleh has personally worked as a resident inspector on JIRR projects.
Emails obtained by The Lens show that two DPW employees brought up concerns about Saleh to top officials in the Cantrell administration. A third person, who identified themselves as a DPW employee, emailed the city’s ethics board with similar concerns. They warned about the ethics question regarding Saleh’s son, as well as other ongoing HR problems allegedly involving threats and harassment.
The two employees who raised concerns directly with the Cantrell administration — Marcello Barbaro and Randi Jones — were fired shortly after.
The third person, in an email to the city’s Ethics Review Board, said the two employees were “ostracized,” had “become targets” and were eventually fired because they raised issues about Saleh. Cantrell administration officials denied that their firings were related to the complaints.
Iam Tucker — the owner and CEO of ILSI and a former member of Cantrell’s 2018 transition team after she was elected mayor — told The Lens that there was no basis for the ethics concerns and that ILSI was awarded the work on merit.
“There is no merit to any allegations or insinuations of a conflict of interest, nor the appearance of a conflict of interest,” Tucker said. “We are a highly credentialed, award-winning, certified disadvantaged business enterprise. We are in high growth mode, and are continuing to expand our operation.”
In a statement, Cantrell’s office said, “The City conducted thorough investigations into each of the above mentioned complaints, all of which were determined to be unsubstantiated and unfounded.”
Internal city emails obtained by The Lens indicate that concerns about Saleh grew within the Department of Public Works in late 2020 and came to a head in early 2021, as the department’s director, Keith LaGrange, was leaving the city. Saleh, who at that point was a project manager supervisor for DPW, was being considered to replace him as interim director.
In February 2021, the department’s then-Deputy Director of Administration Marcello Barbaro emailed concerns to Ramsey Green, the city’s deputy chief administrative officer for infrastructure, the same day he found out Saleh was poised to become the interim director.
“First thank you for giving me a heads up about Khalid become the interim Director and I appreciate that,” Barbaro wrote. “Employees have been voicing some concerns since July as departmental changes took place. In the last two months, incidents and complaints had increased to the point we needed to address behavior immediately through HR.”
Barbaro informed Green that there were ongoing HR issues and an administrative investigation into Saleh. He wrote that he and the departments’ human resources manager had decided Saleh should undergo HR training on ethics, sexual harassment and workplace violence.
Barbaro told Ramsey that the ethics questions were in part related to ILSI, the engineering firm and JIRR contractor that employed Saleh’s son.
“Khalid was (until last week) part author, participating in selection committee, and active contract manager of live procurement of Engineering Services Pool for engineering services including resident inspection,” Barbaro said.
He added that the department’s immediate response “for the Ethics violation was removing Khalid from anything to do with” a public bid for JIRR engineering services. He said the decision was made in consultation with Joe Threat, who oversees FEMA capital projects as director of the city’s Project Delivery Unit, in order “to lower risk” to the public bid.
A few months later, another employee raised similar concerns. This time it was Randi Jones, who oversaw the entire JIRR program as the capital projects program administrator for DPW. She sent an email to Josh Hartley — then-deputy director of DPW operations and current interim DPW director — with a spreadsheet outlining who was getting JIRR contracts.
Jones pointed out that when she added up ILSI’s work as a prime contractor and subcontractor, it was becoming one of the most commonly used engineering firms for the JIRR program, with $4.8 million worth of work as of May 2021 — the sixth highest out of 113 engineering firms working on the JIRR program.
“It is my understanding that Khalid selected the last 80 or so project assignments,” Jones said. “We are still trying to identify the process in which Khalid was assigning projects or determining availability.”
Jones said that before any more engineering services were assigned for the JIRR program, they should be vetted by Jones and then sent to Hartley for final approval. And she asked for the department to start tracking subcontractors and subconsultants put on JIRR prime contracts.
Six days after she sent that email, both Jones and Barbaro were fired. (Both were “unclassified” employees, meaning they don’t have the same civil service protections that “classified” employees have.) Saleh, meanwhile, was promoted.
In October 2021, the Cantrell administration publicly announced that Saleh would be taking over as program administrator of the entire JIRR program. A budget presentation a couple weeks later identified Saleh as head of capital projects — Jones’ position before she was fired.
In a statement, Cantrell’s office denied that Barbaro and Jones’ terminations had anything to do with their complaints about Saleh. The Mayor’s Office said their terminations were the result of a reorganization of the department, as well as “personnel concerns raised about Marcello Barbaro and Randi Jones that were brought up during interviews with myriad Department of Public Works (DPW) staff members.” The statement did not explain what those concerns were, but said they were “validated” by the Chief Administrative Office’s Human Resources.
The statement confirmed that the administration planned to promote Saleh to interim DPW director — rather than JIRR program administrator — but that “this promotion was paused as complaints were raised about Dr. Khalid Saleh around the same time,” the statement said.
The statement said that the city launched investigations into the complaints against Saleh, but found that they were “unsubstantiated and unfounded.”
“DPW subsequently identified a position – JIRR Administrator – that was better suited to Dr. Saleh’s experience,” the statement said.
Ethics Board finds no problems
The city’s statement pointed out that DPW’s ethics liaison made a request to the Louisiana Board of Ethics in April 2021 asking for an advisory opinion regarding the conflict of interest concerns raised by Barbaro and Jones.
The state Board of Ethics ruled in June 2021 that based on the information provided by DPW, Saleh’s continued employment wasn’t prohibited by the Louisiana Governmental Code of Ethics.
But the state’s opinion is difficult to apply, because it appears to be based on incomplete information.
The Ethics Board board ruled that Lufti Saleh would only be prohibited from working on contracts signed directly with his father’s agency. But board members seemed to be under the impression that ILSI was working for an agency entirely separate from the one Khalid Saleh works for.
ILSI is doing its city work through DPW, the department that Khalid Saleh works for. Moreover, the vast majority of ILSI’s work is for the JIRR program, which also comprises the vast majority of Khalid Saleh’s responsibilities as a city employee.
State Ethics Administrator Kathleen Allen said in an interview that the ruling was based on organizational charts provided by the city, which showed Saleh below the department’s deputy director of operations. She said the board decided that Khalid’s official “agency” was the “operations division” of DPW, and that the “operations division” didn’t appear to involve the JIRR program.
But DPW is a single department. The Lens sent Allen two other DPW organizational charts from 2020 and 2021 that don’t include an operations division and show Saleh’s clear involvement in the JIRR program.
“We had been provided some organizational charts,” Allen said. “They do not look like what you sent us.”
She also said that the board did not receive information regarding Lufti’s personal involvement in the JIRR contracts.
But she said that at the heart of the board’s decision was that Lufti Saleh shouldn’t be working on contracts with his father’s “agency” — the unit of government where Khalid Saleh maintains a “sphere of influence.”
“The board has held that in prior opinions that the son couldn’t do the work if it involved his father’s agency,” Allen said.
She said that the board’s definition of Khalid Saleh’s “agency” was based on the limited information provided by the city. She said the opinion could have possibly been different if the board had known Khalid Saleh’s main job responsibility was dealing with JIRR contracting, and that Lufti Saleh was personally working on ILSI’s JIRR contracts.
“The advisory opinion is based on the facts that were had and were given at the time,” Allen said. “But I guess what wasn’t fully fleshed out was [Khalid’s] level of involvement and Lufti’s involvement with [the JIRR program]. So generally, what we said was it really shouldn’t involve the operations section, which I would assume, based on what you’re telling me, would include this JIRR program. But again those are not the detailed facts we were given at the time.”
The Lens couldn’t reach Lufti Saleh for comment. Tucker said that his position at the company had nothing to do with the JIRR work it performs for the city.
“[Lufti] Saleh did not begin his employment with my firm until 2020, years after we were a successful bidder,” Tucker said. “We have never been pressured or encouraged to hire Mr. Saleh by anyone. Mr. Saleh is qualified for the job he performs and was hired based on the same application process that all our engineers go through.”
‘Serious concerns’ about FEMA deadline
JIRR, the city’s $2.3 billion road and pipe repair program, is mainly funded through FEMA dollars awarded to fix post-Katrina damage to city road and pipe infrastructure.
For years after the storm, FEMA approved individual repairs in a piecemeal fashion, project by project. But in 2013, federal law was changed to allow FEMA to negotiate lump-sum relief payments for post-storm recovery.
That law set off negotiations between FEMA and the city that culminated in a 2015 agreement to provide just over $2 billion in federal relief — including $785 million in projects that had already been approved by FEMA and a $1.25 billion lump sum settlement.
According to Cantrell’s office, some of that total $2 billion had already been committed to projects prior to the completion of the settlement, leaving a total of $1.66 billion to create the foundation of the JIRR program. That money was combined with a few other local and federal sources to make up the city’s $2.3 billion JIRR program.
The money wasn’t enough to cover the entire backlog of the city’s necessary street repairs — estimated at the time to be $9.3 billion — but it was a start.
Under the Landrieu administration, however, the program struggled to make progress. In April 2018, just weeks before Cantrell took office, a contractor group penned a frustrated letter criticizing Landrieu for the slow pace of progress. Cantrell’s administration has claimed that there was less than $10 million worth of JIRR construction underway by the time she took office in May 2018.
In February 2019, an engineering firm hired by the city, CSRS, released an assessment of the JIRR program that found serious issues in how it was being managed, including flawed processes and protocols that were “not being followed or enforced faithfully.” It also found that the city’s contractors were highly skeptical of the city’s ability to finish the projects on time.
“Drastic adjustments are needed immediately in order to address the challenges of a program of this magnitude,” the report said.
The city has since made major changes to the JIRR program and attempted to speed up the rate of construction. In August 2021, Cantrell announced that JIRR projects were being put on a 90-day pause while the program was revamped to speed up the project and avoid what had become a constant source of headaches for New Orleans residents — open roadwork projects that would stall for months without noticeable progress.
The city still has a long way to go. Two weeks ago, the city told The Lens that the project had only completed $250 million worth of construction projects. The total amount spent is higher, however, because the construction value doesn’t include “soft costs” such as surveys and permit fees, the city said. The city did not respond to repeated requests spanning several weeks for the total program expenditures.
It’s also a bit unclear how much the $2.04 billion in FEMA roadwork funds have been spent. The city told The Lens that by the time the 2015 settlement was finalized, the city had already spent roughly $380 million, leaving $1.66 billion to set the foundation of the city’s JIRR program. Although it’s considered a “joint” program, roughly $1.4 billion was technically from the city’s portion, while $246 million was from the Sewerage and Water Board’s portion.
Cantrell’s office told The Lens that the city had only spent $308 million, or 24 percent, of the city’s $1.4 billion portion. The city didn’t say how much of the Sewerage and Water Board portion had been spent, however.
Although the city didn’t tell The Lens exactly how much of the expiring $2.04 billion is left, it is well over $1 billion. And spending all of that will require a significant acceleration.
A project timetable from a November 2021 presentation shows that the DPW’s plan is to nearly double its pace of annual completed infrastructure projects from 28 in 2019 and 2020 to 50 in 2021. The city then plans to nearly triple that pace by completing 147 projects in 2023.
The city also told The Lens it plans to use $240 million of the FEMA money to pay for small business projects, ranging between $500,000 and $2 million in value, through its “RR300 series projects.” The city didn’t elaborate on exactly what that program is, but said that it is considered part of the JIRR program.
It isn’t clear whether the city will be able to actually follow its plans to ramp up construction. Given the problems the city is having at keeping up with its current pace of construction, it’s unclear whether that type of acceleration is possible. And in recent months, both the city and its contractors have expressed doubt that they can meet the August 2023 deadline.
“It’s a concern to me,” Threat said in January.