Grass Roots Put New Orleans Back on Its Feet

Grass Roots Put New Orleans Back on Its Feet
August 29, 2009
by Corey Dade
The Wall Street Journal

NEW ORLEANS -- This once-ravaged city is finally mending from Hurricane Katrina after years of administrative delays and political disputes that choked the flow of millions of dollars in federal aid.

Money now flowing through the city is beginning to deliver the most visibly widespread improvements since Katrina struck four years ago today. Scores of public works projects are under way. The last police precinct using a FEMA trailer as temporary headquarters moved into real offices earlier this year. More than half the public schools in New Orleans have been turned into higher-performing charter schools. Returning residents have pushed the population to 76% of its prestorm total of about 455,000.

Then, boats floated past a bridge. And today?

The bustle has ignited enough economic activity in metropolitan New Orleans to buffer against some of effects of the recession. Unemployment lagged well behind the national average before reaching 7.3% in June, compared with the U.S.'s 9.7%, unadjusted for seasonal shifts. The arrival of non-natives seeking jobs helped New Orleans rank as the U.S.'s fastest-growing big city for 2008, with an 8% increase.

"It's the sheer amount of construction going on," said Nick Perkins, 38 years old, who relocated from New York two years ago and founded The Receivables Exchange, a Web-based trading market for small and midsize companies to raise capital by selling their commercial receivables. Mr. Perkins said he was drawn by the significantly lower cost of living and lifestyle.

"I tell people it's like living in Shanghai because there's big construction going on literally every single day," he said. "The city's getting a full upgrade. I've not seen anything quite like it anywhere."

The sudden cauldron of activity in New Orleans isn't a byproduct of the grand redevelopment plans laid out by Mayor Ray Nagin, but a grassroots effort.

Mr. Nagin, a Democrat, has been at the center of efforts to rebuild the city since the first days after the storm. He is credited by many here for reconstituting basic city services on threadbare budgets and tirelessly lobbying Congress for aid.

Over the past year, though, a chorus of critics have said Mr. Nagin failed to deliver on his most ambitious plans to bring impoverished New Orleans back as a better city than it was before Katrina, allowed disputes with the City Council to thwart critical government reforms and failed to guide the recovery of the devastated neighborhoods.

As a result, a legion of activists, residents and nonprofit organizations gave up on working with the mayor and instead launched their own recovery plans for New Orleans. Those efforts have become the backbone of the city's resurrection.

"People in New Orleans were waiting for the mayor to lead, and it never really came about," said former Pittsburgh Mayor Tom Murphy, now a fellow at the Urban Land Institute who advises several nonprofit developers in New Orleans. "Now what you're seeing is a real flourishing of nonprofits. They are beginning to make a difference, but it's really in spite of the city."
Looking Back on Hurricane Betsy

Journal coverage of the damage inflicted upon New Orleans by Hurricane Betsy in 1965:

* Hurricane Kills 50 in Louisiana, Damage Put at $150 Million; Toll Is Expected to Rise (Sept. 13, 1965)
* Storm Damage Claims In Louisiana Are Put At Over $300 Million (Sept. 15, 1965)
* State Farm Estimates Louisiana Storm Claims (Sept. 16, 1965)
* Hurricane Betsy Cost Bell System About $16 Million (Oct. 4, 1965)

The mayor acknowledged "grumblings" about his performance but said that is mostly the result of media criticism -- not actual failings on his part. "Most leaders of a recovery don't make it this far. They are either voted out of office or they quit," he said. "So people are going to blame the person closest to the action, and that's the mayor."

A recent example of what critics call Mr. Nagin's mishandling of recovery efforts was the fate of a "soft" second-mortgage program targeting moderate-income renters, the group least likely to return to the city due to a severe shortage of affordable housing. Mr. Nagin unveiled the plan last year with pledges of $27 million a piece in recovery funding from the state and the city.

It was quickly a hit, providing second mortgages of as much as $65,000 that homeowners don't have to pay back if they live in the house for 10 years. The Finance Authority of New Orleans, which administers the loans, has completed 246 closings for first-time buyers and scheduled closings for an additional 105 approved applicants. By the summer, the loans were regarded as a signature incentive for people to return to the most heavily damaged, and poorest, neighborhoods.

"This was very much of a sign that the nonprofits and the city and the state were working very closely together," said Pamela Bryan, director of Operation Comeback, a development arm of the nonprofit Preservation Resource Center that has sold properties it rehabilitates in the Holy Cross section of the Lower Ninth Ward to loan recipients. "We were seeing real housing inventory moved back into commerce. It had a material economic effect and was eliminating blight."

In June, with more applications pouring in, the mayor unexpectedly announced that he would "reprogram" $20 million of the city's planned $27 million contribution for a separate effort to repair existing homes. Nonprofit developers were stunned. "We were depressed," said Ms. Bryan. Mr. Nagin said Friday that he still intends to give the mortgage program $8 million to $10 million.

Mtumishi St. Julien, director of the finance authority, says the city always intended to devote the majority of the $27 million to home rehabilitation. Mr. St. Julien also says his agency separately will begin a new soft second-mortgage program, which will receive a $50 million infusion from the state, to steer buyers to thousands of properties that the state soon will turn over to the New Orleans Redevelopment Authority, the quasi-public agency charged with redeveloping the city's huge stock of vacated parcels.

The mayor created a city Office of Recovery and Development Administration, but didn't push for it to have power over all the agencies critical to development projects -- such as securing financing and acquiring land.

Ultimately, Mr. Nagin said his strategy was to encourage market forces, rather than government dictates, to most determine how neighborhoods are revitalized. He said that will drive population above pre-Katrina levels, especially as properties in the most devastated parts of the city become attractive to residents and developers.

"Our citizens made intelligent free-market decisions on where to come back," Mr. Nagin said. "Now they're starting to go into the most damaged areas. So it wasn't laissez-faire; it was an intelligent strategy."