Q&A on New Orleans: Two Years After Katrina

August 29, 2007

I think the good news two years after hurricane Katrina is that the New Orleans region as a whole has certainly rebounded. It has recovered nearly 80 percent of its population and over 80 percent of its job base. But the problem is that the region-wide numbers hide what’s happening inside the city of New Orleans and even St. Bernard parish, which were the two most hard hit communities after the storm.

I think the real challenge is how do we move and accelerate the progress in the city of New Orleans. And there we see again some good signs, which is the fact that families are returning there. About 68 percent of the population has come back to another city of New Orleans, but we still have a lot more work to do.

And the main challenges are one; the housing recovery is still lagging. There are still many, many homes; many, many apartments that still need to be rebuilt to accommodate returning families and existing families. There are still many homeowners who do not have the resources to rebuild their homes.

The second main challenge is basic city services. Basic city services matter for families and businesses as they make a decision whether they stay in the city or relocate to the city. And here we have real challenges. Families and business care about safe streets, good schools, and a functioning water-sewer infrastructure. And, in all of these cases we see some real problems. Only half of the schools have reopened two years after the storm, which is creating some overcrowding in the classrooms–in some ways families are hesitating to take their children back to school.

Crime rates have gone up and part of the reason why crime rates have risen so much is the fact that the criminal justice system just doesn’t have the facilities to do their work. There are not enough prisons, there are not enough police stations, there are no crime labs for collecting evidence so they can get their job done. That’s a real challenge. And, at the same time, there are so many leaks in the water-sewer system, that the water pressure is just completely uneven in the city. And the list goes on. So, that really feeds to the frustration that so many families and businesses are seeing.

I would say the last challenge is really about the cost of living. The fact there are so many homes that are still not rebuilt as families are returning is that there is really limited housing supply and that is driving up prices. And what we’ve seen in the last two years is rent levels are have gone up in the city and that is added on top of the fact that insurance rates and insurance premiums have nearly doubled. The cost of rebuilding; the buying of materials have gone up. So, in general, families are feeling, in a sea of a lot of still dysfunction, is their cost of living has gone up. Their out-of-pocket expenses are going up and that is adding to a lot of frustration for families about whether they can stay in a situation for that much longer.

I think one of the things we have to remember is that we’re at the beginning of a long term recovery process. There were 100,000 homes that were damaged by the storm. Even a most robust housing market say in California or Florida can maybe generate 10,000 new units of housing a year. So, if you think of that pace, in rebuilding 100,000 units we’re talking about taking 10 years at minimum. So, we have to understand that it’s going to take time.

And the hope is as we move into the next year with the new president and even a new governor in Louisiana being elected this fall—the future leadership and the federal, state and local level will keep the Gulf Coast a priority.

The federal government has spent about $115 billion dollars towards Gulf Coast recovery. One of the things we have to remember though, that of the $115 billion dollars, only 35 percent has been dedicated to the long-term recovery needs of the region. So, when the president today announced that 80 percent of the money has been spent down in the Gulf Coast, the vast amount of the money was spent during the emergency phase of the storm—going to the Red Cross, going to the trailers, going to support the clean-up of debris in the city. But the hard work of infrastructure repair, housing repair, again, has only been one-third of the spending. So, we still have not dedicated the amount of resources needed to support the long-term recovery of the Gulf Coast.