Supply and demand are out of kilter in eastern New Orleans

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Supply and demand are out of kilter in eastern New Orleans
December 12, 2011
by Bruce Nolan
NOLA.com

Every week Alicia Plummer leaves home through the landscaped entry of Fairway Estates in eastern New Orleans and shops for groceries at the nearest store that meets her needs: a Wal-Mart Supercenter on Tchoupitoulas Street, 13 miles away.

Enlarge Rusty Costanza, The Times-Picayune
RUSTY COSTANZA / THE TIMES-PICAYUNE A arrow points to emptiness in the parking lot of the closed Grand Theater in New Orleans East on Thursday, December 2, 2010.
New Orleans East Business Recovery Stalled gallery (21 photos)
Merlin McGhee, a public school math teacher who works in Algiers, also does most of her shopping long before returning to her restored home in eastern New Orleans’ Spring Lake subdivision, where nearly 80 percent of her neighbors have rebuilt their community after Hurricane Katrina.
Neither has much choice.
That’s because the area of New Orleans east of the Industrial Canal remains a commercial desert, despite the fact that a population roughly the size of Lake Charles lives there — and is wealthier. On balance, the east is wealthier than the rest of New Orleans, too.
The area has one major supermarket, no department store, no major electronics or appliance stores, and perhaps two white-tablecloth restaurants — almost nothing in the way of ordinary retail amenities. This in a community that, hidden behind the commercial blight lining Interstate 10, contains largely rebuilt subdivisions of neat brick homes reclaimed by homeowners who clawed their way back from Katrina.
Residentially, eastern New Orleans is back. Commercially, it’s a near-basket case.
“Somebody said we have to drive past 50,000 people to buy underwear,” said McGhee. “But there’s money out here in the East. We don’t understand why there isn’t a huge amount of interest.”
Residents are baffled
The apparent disconnect between supply and demand has left residents baffled and angry.
Some neighborhood and community leaders see evidence of a de facto conspiracy by bankers, planners, nonprofits and at times city officials — no matter the administration — to promote the recovery of other areas of New Orleans over the interests of the East.
Asks Greg Hamilton, a former federal housing executive and former neighborhood association president: How else do you explain that the community houses nearly a quarter of the city’s population, “yet virtually nothing happens in New Orleans East in terms of development?”
The conundrum even baffles many professionals.
Demographer Greg Rigamer has data indicating that 71,000 people live in eastern New Orleans. If it were a city, it would be the sixth-largest in the state.
Their median household income is about $41,000, according to Esri, a national demographics consulting company. That is significantly higher than the $36,200-per-household Esri estimates for Lake Charles.
“I think it’s lack of confidence in the community,” said Rigamer. “I don’t know what else to say. You clearly have the demand. You clearly have the property available. So why don’t you see a movement to invest to serve that community?”
The most common answer is: perception.
Under this widely held theory, eastern New Orleans remains haunted by its pre-Katrina reputation as a community overburdened by a disproportionate share of unkempt, federally subsidized apartment complexes that blossomed after the crippling oil crash of the early 1980s. By Katrina’s arrival in 2005, dense, low-income housing, lax code enforcement and the crime those conditions bred had blighted what once had been a robust and diverse bastion of middle- and upper-income New Orleanians.
Moreover, that pre-Katrina reputation seems to be validated behind the windshield if a tour of the area is confined to its major commercial arteries of Interstate 10, Lake Forest Boulevard, Read Boulevard, Morrison Road and others, where shuttered and under-used strip malls are the norm.
But behind those dreary commercial corridors are built-out subdivisions where scattered vacant homes still dot almost every block, but where the overwhelming impression is of recovery. In some areas, like Eastover and along Bullard Avenue, the impression is not just recovery, but substantial prosperity.
“Most people never get into the residential area,” said Barbara Johnson, executive director for an economic development initiative in the East called Fast Forward Main Street. “When you tell them there are 70,000 people back — to a person, people are shocked. Because the public areas look like a bomb went off.”
City Councilman Jon Johnson and others say the region also suffers the burden of the public sector’s slow recovery. Joe Brown Park is still largely closed, the East New Orleans Regional Library has not been rebuilt and 7th District police officers still work out of temporary quarters.
The area’s major hospital, Pendleton Memorial Methodist Hospital, which many believe will be a commercial magnet, has not reopened.
Perhaps most crucially, neither has Lake Forest Plaza, the long-awaited reincarnation of the big regional mall that in the late 1970s was the crown jewel of the East. Planners and neighborhood leaders want to see the mall, stagnant long before Katrina, rebuilt to catalyze growth all around.
Hospital redevelopment
If it’s just perception that paralyzes many businesses, Barbara Johnson’s coalition of local businesses, Fast Forward Main Street, has made eradicating blight the top priority in a multipronged strategy to prepare eastern New Orleans for reignition.
“You’ve got to build an environment that breeds confidence,” she said.
Elsewhere, the city has completed the purchase of the shuttered hospital, using $16.3 million from federal recovery grant financing. Mayor Mitch Landrieu has promised to open an emergency department on the Read Boulevard campus in 2011, with a complete renovation of an estimated 80-bed community hospital to follow by 2013. The next major step, which will make or break the deal, could be obtaining government mortgage insurance to back bonds financing the rest of the $110 million project.
“I guarantee you, the day you have a Methodist Hospital on the ground you’re going to have an explosion of commercial development,” Hamilton said.
In addition, Jon Johnson said his council district, District E, which contains most of eastern New Orleans, is about to see $168 million in public improvements.
At long last, construction has started on the new regional library at Read and Lake Forest boulevards. Nearby, construction has also begun on a $2 million indoor pool at Joe Brown Park, which will get a $25 million makeover.
“Joe Brown Park is going to be a model regional park similar to Lafreniere Park,” Johnson said. “It’s going to be a really, really nice park when we get through with it. Probably by the end of next year.”
Problems at the plaza
Then there is the holy grail of economic development in the East, the reconstruction of Lake Forest Plaza as a major regional mall.
Fourteen months ago, the City Council elected to invest in the Plaza’s redevelopment.
The council agreed to let the property’s developers, Cesar Burgos and Ashton Ryan, keep the income from up to 2 cents of a 2.5-cent general fund sales tax, which Burgos estimated at about $8 million per year in increased collateral for their loans.
But the council included a proviso that said the city would not put up more than the state was willing to offer.
Burgos said last week that the state has agreed to chip in only $2 million a year for 20 years, effectively reducing the city’s contribution to a similar amount.
Burgos said the combined public investment is now too small to build the $200 million mall he and his partners envisioned, and that the state will not agree to participate in a radically scaled-back version.
Burgos and Johnson said they remain in talks with the state, but if a revised deal is struck, the development still will have to go back to the City Council. Burgos said they would ask the council to remove its restriction that it contribute no more than the state. He said he hopes the city, once willing to contribute up to 2 cents in sales tax income, will reaffirm that, even if the state is not an equal partner.
Burgos said if an agreement can’t be reached, that could mean selling off parcels for piecemeal development by lower-quality retailers.
“Time is pretty ripe where we’re all going to have to sit down and say, ‘Are we going to build this thing or not?’” Burgos said. “And if we’re not, Lake Forest Plaza has to move in a different direction.”
But absent big-ticket public reclamations and private sector mega-projects like Lake Forest Plaza, residents continue to wonder why smaller businesses haven’t moved into the retail spaces in eastern New Orleans, given the pent-up demand for services.
Rouse still looking
Donny Rouse, the executive in charge of securing new supermarket sites for Rouse Enterprises, said he has scoured eastern New Orleans for four years looking for a site the company thinks is affordable.
Eight months ago, Rouse said he thought he was close to a deal to place a supermarket in a former Circuit City store near the corner of Bullard Avenue and Interstate 10, only to find a neighbor’s title restriction blocked the deal.
In the time he has searched for one site in eastern New Orleans, Rouse said his company has opened four stores elsewhere in Louisiana.
“I’ve looked at other properties, and prices are way too expensive,” he said. “What they’re asking for land in New Orleans East I’m getting in Lafayette for land next to the Cajundome.”
Rouse said the company would prefer to start with a relatively modest store, given high insurance costs and a general worry that eastern New Orleans might not be sufficiently hurricane-proof for his company’s comfort. If the store worked out well, perhaps the company might be willing to upgrade later, he said.
“I feel it’s still a risky area,” he said. “I just don’t want to pay too much.”
But economic development champions like Johnson, and neighborhood leaders like Hamilton and others argue that the region is now as safe, or safer than any other, after billions of dollars in Army Corps of Engineers investment — and perceptions like Rouse’s are precisely those that have to be put to rest.
“There’s just a tremendous misunderstanding of the marketplace,” said Johnson. “We have to change it.”