New Orleans Business 2010: Tale of Two Cities

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Then And Now: New Orleans Five Years After The Katrina Disaster

The official commemoration of Hurricane Katrina's fifth anniversaryhas its own media center.

It is a complex of meeting rooms in the downtown Marriott hotel on Canal Street, where visiting journalists can receive story tips, Mardi Gras beads, even discounted hotel rooms.

The center is a stark contrast to five years ago, when National Guard troops—once they finally arrived—pointed loaded guns at members of the media, maybe because we were some of the only people left in town by then.

The anniversary is all about contrasts, as we found on our latest trip back to New Orleans this week. More than one resident has called it a tale of two cities and, as cliched as that phrase may be, it certainly applies here.

Unemployment is below the national average, but poverty is twice the national rate.

Aided by generous tax incentives, new businesses and entire industries are opening up in New Orleans. They include the Receivables Exchange, an electronic marketplace that allows businesses large and small to sell outstanding invoices to hedge funds rather than wait for payment. The exchange is booming, aided by a receptive business environment in post-Katrina New Orleans, said president and founder Nic Perkin.

Business is up 300 percent so far this year, said Perkin. "We're growing pretty close to as fast as we can."

And he believes it could not have happened, were it not for Katrina.

"Obviously, a human tragedy," added Perkin. But he believes it "permanently changed" Louisiana's business climate, by eliminating bureaucracies and spurring a plethora of tax credits.

But while new companies sprout here like wildflowers, many New Orleans area neighborhoods are overgrown with weeds, suspended in time—from August of 2005, to be exact.

In places like Gentilly's Pontchartrain Park and the Lower Ninth Ward, where Brad Pitt's eco-friendly Make it Right homes seem to pop out of nowhere, are splashes of new development.

But there is also the Ninth Ward intersection of Louisa and Law, which we have visited repeatedly over the years. Once, it was the epicenter of a neighborhood-within-a neighborhood, with a school, church and small snack shop.

All that has reopened is the church, but the giant stained glass window over the entrance—which residents used to escape into a raft—is bricked over. Few residents have returned, and the school was eventually torn down. Many of the homes, or what is left of them, have barely changed since the waters receded five years ago.

The same government that has nurtured the new businesses is choking many residents' efforts to come back home.

In the Gentilly neighborhood near from Lake Pontchartrain and the Industrial Canal, Leslie Howard surveys the empty lot where her home once stood. She wants to rebuild, but the federal and state program set up specifically for homeowners like her, won't pay.

"They're responsive," she told us, "until it comes to writing the check."

The $11 billion Road Home Program, the largest housing recovery program in US history, has been plagued by complaints, including Howard's.

The program is supposed to pick up where insurance leaves off. But because Howard used the proceeds of her flood insurance policy to pay off her mortgage, which she had to do in order to obtain a construction loan, the Road Home Program ruled that any benefits paid to her would somehow be a duplication. So Howard now rents a place in nearby Kenner, continues to battle with the Road Home Program and still hopes to return to Gentilly.

"I used to say I'd rebuild by Mardi Gras. Then it was Easter," she said. "Now, I guess, it's Christmas."

The program has issued more than 127,000 grants, according to its website, but the average grant is less than $70,000.

Many of the awards are supposed to be coupled with funds used to elevate homes above flood levels, breaking the cycle of flooding and rebuilding. But fewer than 200 elevation grants have been issued, and 65,000 applications are still pending, according to homeowner Melanie Ehrlich, who founded the Citizens' Road Home Action Team, or CHAT, to push for changes.

"The program wasn't designed for applicants. It was designed with other purposes in mind. That is clear," she said.

The program, funded by federal Housing and Urban Development grants to the state, is administered by a private contractor, ICF International, which reported more than $250 million in Road Home revenues last fiscal year. Ehrlich says the program, by design, benefits the contractor first.

Another point of contention is the program's formula, which relies on pre-Katrina property values, a disadvantage for property owners in low-income neighborhoods. This year, a federal judge found evidence the formula discriminates against African-Americans, but denied a motion to freeze payouts.

In other words, while Katrina forever changed New Orleans, some things never change, including the racial and economic divide that has been part of this city for centuries.

In 2005, we watched it play out before our eyes, standing at the edge of the floodwaters, where desperate storm victims sloshed by, seeking help, but finding none. That was at the corner of Canal and Camp Streets, next to the Marriott hotel, which today serves as the welcome center for the media, here to find some profound meaning in this dubious milestone.

At the media center downtown, the representatives are selling a resurgent New Orleans, open for business. But the Big Easy also still needs the nation's support to get business moving.

It is indeed a tale of two cities.

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