Katrina +5: Jobs Lag and the Road Home Remains Uncertain

If jobs and housing are the barometers by which recoveries are judged, five years after the storm, New Orleans is getting mixed reviews. The job market was initially brisk due to the inevitable uptick in construction and service trade jobs, which were accompanied by higher hourly wages. In many ways, observes Jefferson Parish Councilman Byron Lee, Louisiana was for a long time sheltered from the economic downturn going on just about everywhere else, because it was still in recovery mode.

Lately, however, it’s catching up with the rest of the nation, and “feeling the effects of layoffs and limited job growth,” Lee said. The city of New Orleans and its surrounding parishes have a very small corporate base and the healthcare sector jobs that once fueled a robust middle class sector no longer exist.

“The Charity Hospital system and some of our private hospitals in New Orleans East are still closed,” said Lee. “For the last five years, people have gone back and forth over the footprint of the city, debated the size of the hospitals, who should run them, and the number of beds they should have, but the jobs have not come back.” The state has shifted some of its own financial resources to the municipalities like Baton Rouge where the people with talent and means had relocated.

New Mayor Mitch Landrieu recently executed a deal to purchase Methodist Hospital, and Lee believes that the resulting jobs will play a significant role in furthering the city’s recovery. Indeed, it’s widely believed that Landrieu will be far more successful in leading New Orleans to a more complete recovery than former Mayor Ray Nagin was able to.

“Nagin was not the man for the moment. In many ways his leadership was erratic and over time he lost the confidence of the business community,” said Southern University political science professor Albert Samuels. Based on Nagin’s seemingly limited capacity to deal with many of the problems, a large chunk of recovery money was routed through the Louisiana Recovery Authority.

According to figures provided by the LRA, the state of Louisiana gave the city $200 million to pay for work that the Federal Emergency Management Agency wouldn’t reimburse; $100 million to it’s Sewerage and Water Board; and $372 million for the Road Home program.

Lee believes that Nagin lacked an inner circle of people who possessed the type of upper level management experience needed to help him make decisions. He often appeared to be operating in a chaotic vacuum, rather than as part of a cohesive team. And

although Lee recognizes that New Orleans bore the hurricane’s biggest brunt, he also says that Jefferson Parish’s recovery process was much smoother and successful and is approximately 95% complete.
Working closely with its parish president, the parish council developed a plan that focused on bringing back both residents and businesses. It used federal and state loans to rebuild, and relied on FEMA reimbursements to get the parish government up and running again.

“We also borrowed money from the state and because we were the first parish to come back on line, we had a very robust sales tax base, which helped us to literally self-fund a lot of our recovery needs,” said Lee.

Getting people back into their homes and providing affordable housing options for renters continues to face many obstacles. In July, the U.S. House of Representatives voted to rescind $318 million from the Road Home program. The NAACP Legal Defense & Educational Fund is suing the U.S. Housing and Urban Development Department and LRA executive director Robin Keegan because it believes that the program discriminates against African Americans.

According to ReNika Moore, the organization’s assistant counsel, Road Home grants are based on the lesser of either a home’s per-storm value or the estimated cost to rebuild. Because black homeowners are more

orwp-incontent-custom-banner ampforwp-incontent-ad3"> likely to live in neighborhoods with lower home values, they’re more likely to receive grants based on the pre-storm value, which will be assessed lower than nearly identical homes in white neighborhoods, instead of reconstruction grants. For example, she said, a black homeowner whose house sustained more than $308,000 of damage, was offered the pre-storm value rather than the maximum $150,000 grant that he was eligible to receive to rebuild.

In June 2010, plaintiffs filed a motion to freeze surplus Road Home funds until the lawsuit is concluded, which was denied on procedural grounds. However, Moore said, the court acknowledged racial discrimination in the program’s formula.

But according to Keegan, homeowners decided which sort of grant they wanted. As of July 13, 2010, 127, 656 applicants received $8.56 billion from the program. Of that number, 117,290 chose to stay in their homes and signed a covenant to reoccupy within three years of closing; 8,108 chose to sell their damaged home but continue living in Louisiana; and 2,258 chose to sell the damaged home and leave the state.

When the program was first launched, it operated more like a construction loan program, but HUD decided that LRA had to go to a full compensation model. Factors such as what sorts of insurance they had or their ability to get an SBA loan to start reconstruction all played into how the grant calculations were made and federal regulation required LRA to use 51% of the funds to help low-to-moderate income families, Keegan said.

Sometimes it takes a village to rebuild a neighborhood, but only if the residents have their own resources.
Gretchen Bradford’s family has lived in the city’s Pontchartrain Park neighborhood since 1958. It was the first subdivision established primarily for blacks, and included a school, several churches, a university and a golf course designed by Joseph Bartholomew. Bradford said Bartholomew designed all of the city’s courses but as an African American was prohibited from playing them.

The neighborhood’s second generation, which includes Bradford; former New Orleans mayor Marc Morial, who now heads the National Urban League; and actor Wendell Pierce were determined to restore their family homes, because that’s where their hearts are. Led by Pierce, residents established a neighborhood association and a community development corporation through which they negotiated the return of properties that people gave up after the storm. Through the Road Home program, they’ve rebuilt demolished homes into green homes, which several people are in line to buy.

For more information about purchasing a home from the Pontchartrain Park Homeowners Association, call 504.208.9291.