Still no firm numbers for businesses destroyed by Katrina

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Published: November 13,2006

Earlier this fall, the Mississippi Business Journal had this inquiry for information: How many Coast businesses were destroyed by Hurricane Katrina, and how many have reopened in the 14 months since the storm?

That is information that is difficult to find even by calling a number of state, federal and local governmental agencies, and groups like local chambers of commerce.

“If you find out, will you let us know?” asked Claire Dugger, Harrison County Development Commission. “I don’t really have any number on that. I would not be able to venture a guess when it comes to commercial and retail.”

The SBA has had 10,969 business applications for disaster recovery loans, and thus far 4,633 have been approved for a total of $540,797,500. Some applications are still pending. But the SBA has no idea how many businesses were lost, or how many have recovered.

“We don’t track the numbers of businesses destroyed,” said a spokesman with the SBA. “The insurance commission does. Or maybe you could try the chamber of commerce national office.”

“No. We do not have that,” said Mississippi Insurance Commissioner George Dale. “All we have is the claims reported and paid by companies, and the amount of money that has been paid. Unless the chamber of commerce would know in each town, we wouldn’t have it here.”

The Mississippi Emergency Management Agency (MEMA) and the Federal Emergency Management Agency (FEMA) said they did not have information about the number of businesses destroyed in Hurricane Katrina.

Several chambers of commerce contacted also didn’t have figures.

The business comeback varies widely across the Coast. For example, Pass Christian still doesn’t have hardly a single business back in a permanent building. Temporary buildings serve as offices for a few banks, real estate companies and a restaurant.

Next door in Long Beach, recovery has also been slow. The biggest loss regarding generation of tax revenues was a relatively new Wal-Mart Supercenter on the beach. Thus far nothing has been done to rebuild the Wal-Mart, but the commercial district along Railroad Street in Long Beach is coming back strong.

Waveland and Bay St. Louis were the hardest hit of the Mississippi coastal cities. But business is coming back along U.S. 90, and some businesses have reopened in Old Town Bay St. Louis.

Towns like D’Iberville and Gulfport with a major retail presence north of I-10 prior to Katrina that had relatively little damage have seen sales taxes increases since the storm.

Gulfport lost approximately 650 businesses due to Katrina. But businesses are returning to Gulfport, and there are more licensed businesses in Gulfport today than there were pre-Katrina.

“We are extremely encouraged by the number businesses that have returned to Gulfport and the number of new business that have opened here since Katrina,” said Mayor Brett Warr. “Every day developers, investors and businesses large and small are looking in Gulfport because of our city’s tremendous potential for growth and financial prosperity.”

Mike Necaise, Gulfport’s director of finance and administration, said sales tax revenue has increased significantly since the storm.

“We are expected to exceed our sales tax budget by approximately $6 million this year,” Necaise said. “Right now the city is averaging about a 50% increase each month, and these gains have helped the city offset losses in gaming and property tax revenue and maintain our strong, pre-storm A2 bond rating-a sign of our positive financial outlook.”

Blake A. Wilson, president, Mississippi Economic Council, said it is difficult to estimate the number of businesses that were lost. It would depend on if you also counted professional businesses.

“It is a hard number to find,” Wilson said.
Brian Sanderson, president, Gulf Coast Business Council, started looking for figures about businesses lost and those that have recovered a month and half ago, and hasn’t been able to come up with any.

“Certainly the small business owners are the ones who are in the most critical condition particularly because of the insurance issues,” Sanderson said. “On the Wind Pool, small business owners today are looking at a 268% increase in their Wind Pool premium. Most small business owners are individual residents. If their individual homes were in the windpool, there was a 90% increase there. It is a double hit there. The business council is working hard with state government to bring those rates down in the short term, and certainly in the long term.”

Sanderson said towns that have major retail anchors such as Lowe’s, Home Depot or Wal-Mart are seeing significant gains over this period last year or before the storm. While that is good news for those towns, it hasn’t been spread evenly across the board on the Coast.

“Those that didn’t have significant sales tax increases got some help from some grants to cities and some counties,” Sanderson said. “Hancock County had significant sales tax loss projections.”

Like homeowners, many businesses owners are waiting on insurance payments. Unlike homeowners, business owners who were not in a flood zone but flooded and didn’t have flood insurance (or adequate amounts of flood insurance) are not eligible for government grants.

Businesses on the beachfront are slowest to come back. In addition to issues about insurance payouts for storm damage, it is also harder and more expensive to get insurance on new buildings. And higher building elevation requirements add to construction costs.

“I think business will come back on the beach over time, maybe different forms of business such as tourism and casinos,” Sanderson said. “Some of your big box retail will move north of the interstate where there is more available land and insurance rates are perhaps better. We may also see different forms of retail in mixed-use development rather than big box and strip malls. That isn’t just because of finances, but the better planning that has been done on the part of the communities to adopt smarter ways of doing things.”

There is no doubt small business has been significantly affected. And Sanderson said the longer small business recover takes to come back, the longer it will take for the Coast’s recovery to be fully realized.Some businesses that were lost in one town moved to another. For example, the primary Ocean Springs business district was spared from flooding. Some businesses destroyed in other towns have reopened in Ocean Springs such as Alberti’s Italian Restaurant and Moran’s Art from Biloxi and Hillyer House from Bay St. Louis.

“We were very fortunate that all of our commercial district survived,” said Julia Gustafson with the Ocean Springs Chamber of Commerce. “That allowed businesses from other parts of the Coast that lost their businesses in the storm to move here.”

Pascagoula City Manager Kay Kell said Pascagoula lost 30 businesses totally in the storm, and 1,000 were damaged. Before the storm in August 2005, the city had issued 806 businesses licenses. A year after the storm, the city had issued 665 business with 62 of those for new businesses.
The city ended up last year with about $2.2 million in additional sales tax revenues. That was quite a jump considering the city’s sale tax collections are usually about $5 million.

“That came mainly from Wal-Mart, Lowe’s and the car dealerships,” Kell said. “Car sales are our largest source of sales tax. Considering the fact that 95% of the city went under water, everyone bought a new car. So that is a large portion of the sales taxes.”

Kell said it is important to find out how many people are coming back, and also what businesses need. So volunteers with the Pascagoula Economic Development Advisory Council are going to do the work.

“This is information that we need and we don’t have the staff to do these surveys,” Kell said. “Volunteers are coming in to help survey to find out how many people are coming back, and check on what our businesses need.”

Vincent Creel, spokesman for the City of Biloxi, said Biloxi lost 6,000 homes and businesses, but doesn’t have a breakdown of how many of each. The city has issued 4,000 permits for repairs of homes and businesses. It has issued about 302 permits for construction of new businesses with a value of $40 million. Creel said that compares to a total of 809 commercial building permits issued from 1995 to 2004. New home building permits since the storm total 683 for a total value of $80 million.

“We’re hoping these numbers for new construction will skyrocket once homeowner grants siphon down to the homeowner,” Creel said. “We know the biggest part of the growth is yet to come.”

Contact MBJ contributing writer Becky Gillette at bgillette@bellsouth.net.

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