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Defying economy, New Orleans keeps rebuilding

The numbers aren't so dismal here as pre-Katrina residents continue to return, creating a constant demand for construction. Nearly $35 billion in federal aid doesn't hurt either.

April 03, 2009|Richard Fausset

NEW ORLEANS — This city is a rarity in 2009: a place full of hard hats and big building projects and subcontractors roaring around in pickup trucks. A city where home prices have dipped only slightly, and where the unemployment rate is 5.3% -- compared with 8.1% nationwide.

New Orleans, it seems, has largely dodged the Category 5 recession pummeling the rest of the country, thanks to its unique post-Katrina economy. For locals accustomed to bad luck and trouble, the good news can feel a little strange.

"It's totally bizarre, because normally, we're the worst in everything," said Brennan Manale, a clerk at Bella Rouge, a Magazine Street shoe boutique.

Jennifer Mansfield, a worker at a busy French Quarter gift store, put it this way: "I can't tell how bad it is in the rest of the country, because it's so normal here. Well, normal for New Orleans."

That qualification -- "normal for New Orleans" -- is a crucial one. The old cankers of crime, corruption and low wages still fester here, and neighborhoods remain choked with more than 68,000 vacant homes -- most of which have been moldering since the flood of August 2005.

But some aspects of New Orleans' "new normal" have resulted in an enviable economic picture compared with the broader global meltdown.

Many chronically unemployable locals moved away for good, keeping the unemployment rate low. Meanwhile, pre-Katrina residents have steadily trickled back to town with plans to fix up old homes, creating an ongoing demand for renovations.

Perhaps most important, the federal government has allocated $34.5 billion in rebuilding aid for the state, with $19 billion of that amount still to be spent, according to the Louisiana Recovery Authority. And that doesn't include the $3.8 billion headed to Louisiana under the federal stimulus package hammered out in February.

The recovery dollars are paying for projects large and small -- from an $800-million replacement of the damaged "twin span" bridges over Lake Pontchartrain to thousands of homes being fixed under the state-administered Road Home program.

The Army Corps of Engineers continues to use contractors to strengthen the levee system. And in working-class neighborhoods like the 9th Ward, laborers are still pounding away on small-scale renovations.

"Katrina was a horrible nightmare, but the reality is that for the construction industry, it's been a blessing," said Theresa Leger, a vice president of Landis Construction Co., a local firm that has remained busy since the hurricane.

Though nationwide construction employment fell more than 10.2% in January, in New Orleans it jumped 5%.

Construction jobs have dipped a little since then, according to the state workforce commission, but economists say the building industry will probably buoy the New Orleans economy for years to come -- especially given the $19 billion of federal reconstruction money that remains unspent.

The delay in spending that money can be attributed at least in part to bureaucratic infighting and ineptitude. Ironically, the same delays could end up helping the city now, said Ivan Miestchovich, director of the Center for Economic Development at the University of New Orleans.

"That $19 billion is going to keep a lot of people in the construction industry and related fields working, and maybe help us ride out the worst effects of a prolonged recession at the national and global level," he said.

In the days and months after the hurricane, contractors from around the country flocked to New Orleans to take part in the recovery. More recently, a second round of workers has arrived: those who are fleeing the moribund construction business in their hometowns.

Alvin Johnson, the human resources manager for Ellis Construction Co., said that a year ago, it was difficult to find good superintendents for the company's numerous New Orleans building projects.

"Now they're everywhere," he said. "There are people begging to come down here, because it's been so desperate in the parts of the country they were in."

One of Ellis' recent hires, superintendent Roger Charboneau, is overseeing a 51-unit apartment complex built in a common post-Katrina style -- with the first floor jacked about 12 feet above a ground-level parking garage.

Charboneau, 50, had been an independent builder in central Florida until the housing bust dried up his prospects. He and his wife were initially wary of moving: They imagined New Orleans in ruins.

When they arrived, they were pleased to discover that swaths of the city were back to normal -- just in need of builders like him.

"We said, 'Gosh, this is totally functional here,' " he said. "It's a real nice city."

The devastation of so much housing has had one upside: The diminished supply and a growing demand have spared New Orleanians from the wealth destruction that has buffeted the rest of the country.

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