For nearly a decade, Blakely worked as a consultant to Oakland, California mayor Elihu Harris. In 1998, Blakely ran to succeed Harris as mayor of Oakland and finished the election in a very distant second-place behind Jerry Brown.
Blakely was hired by New Orleans MayorRay Nagin after Hurricane Katrina. Blakely's role in New Orleans was never far from controversy: he was criticized for describing New Orleans as a "third world country" and its residents as "buffoons" and for not accomplishing enough. He alleged, in a speech in Sydney, that the actual population of New Orleans pre-Katrina was known to be lower than the official number reported by the U.S. Census Bureau but that local politicians blocked an update of the figures because of the potential downward effect on federal grants. On another occasion he also analogized New Orleans to divided neighborhoods of Sunnis and Shias; at Johns Hopkins University he was alleged to have said that New Orleans needed birth control. Additional targets of criticism were his "on loan" status in which he continued to receive part of his University of Sydney salary while New Orleans paid him full-time and his alleged involvement in transparency issues similar to the New Orleans e-mail controversies. Blakely's New Orleans salary was $150,718 for 2007 and $154,510 for 2008. According to the Times-Picayune, "Blakely has acknowledged that trying to shepherd a clumsy and sometimes-inept City Hall bureaucracy through the maze of federal rebuilding rules has been a challenge. He admits perhaps some of his early promises about a speedy recovery were overblown." Columnist James Gill used Blakely's resignation to poke fun at Nagin, who had professed being unable to remember the facts of certain controversies during Nagin's second term as mayor; Gill averred that Nagin and Blakely "complement each other admirably": "Nagin cannot remember things that did happen, while Blakely can effortlessly recall a bunch of things that didn't." Subsequently, Gill's fellow columnist Stephanie Grace asserted that Blakely and Nagin have behavioral similarities such as "unfulfilled promises" and cited a 2007 comment by Blakely that New Orleans would soon have construction "cranes in the sky" as part of the rebuilding effort. In October 2009, Blakely again made controversial statements about the New Orleans recovery and his role in it. In a video interview on U.C. Berkeley's CalTV, Blakely said "I should have left a little earlier, for two reasons: One, my health wasn't good. Secondly, I had other things I wanted to do, and administering a recovery is not one of them." In the same interview, Blakely claimed that the people of New Orleans were lazy and virulently racist, and that "Unless the next mayor is very clever, it's going to explode and there are going to be race riots." Louisiana Lieutenant GovernorMitch Landrieu responded to published reports of Blakely's comments, saying that they were "offensive and untrue" and calling Blakely's tenure in New Orleans a "complete failure". To highlight Blakely's total failure at accomplishing anything during his time in New Orleans, he was quoted on February 23, 2011 as saying that only 30 percent of the New Orleans' residents have returned when in actuality over 75 percent have returned.
On May 6, 2009 Blakely announced his intention to resign from his position as "Recovery Czar" in New Orleans effective 2009 July 1 and to return to Australia. Simultaneous with his resignation, his agency was renamed the Office of Community Development, supervised by Blakely's deputy director Austin Penny. In a farewell presentation to the City Council's Recovery Committee, Blakely urged that New Orleans "face south" to increase trade with Latin America in view of the Panama Canal expansion project. He also recommended focusing the city's biomedical industry on tropical diseases and working on New Orleans East to rebuild Pendleton Memorial Methodist Hospital and to "let people know we're in the technology business" by making the Michoud Assembly Facility a tourist destination. Shortly before his departure from New Orleans, Blakely was asked whether he would return if the city suffers a future disaster. Blakely's response: When his role in New Orleans ended in 2009, Blakely returned to an appointment at Australia's University of Sydney. Blakely's name continued in the New Orleans news, as when Nagin was quarantined in China while on the way to a University of Sydney conference where Nagin was to discuss, according to the printed program, how he "launched several high profile investigations that resulted in a paradigm shift that unleashed unprecedented economic development"—a statement which attracted a quip from satirical columnist James Gill: In 2011 Blakely published a memoir about Katrina—a book which Gill reviewed scathingly, asserting that "It would take another book to list all the errors in Blakely's."
