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Professionals voice concerns about slow pace of recovery

Nearly two years since Hurricane Katrina devastated large areas of the Mississippi Gulf Coast, architects and engineers see a lot of progress in some areas. Huge mountains of debris have been removed, and vital public services have been restored. But progress in rebuilding is still spotty.

“From my perspective, it looks like it is pretty good for everyone north of I-10,” said Jeff Williams, branch manager of the engineering firm Burns Cooley Dennis Inc. in Gulfport. “But south of I-10 and along the beach, it doesn’t seem like much is happening yet. There was so much devastation in those areas. My understanding of insurance issues is that people living there before have difficulties affording the insurance. I think it will still be many years before we are close to being back the way we were before, and probably never will be exactly the same again.”

Williams said work for his engineering company was slow for the first year after Katrina, and then it started getting really busy. Most of its work has been in the commercial area.

Phillip Shaw, an architect with Shaw Design Group, said while his firm remains busier than before Katrina, he is concerned that the Coast is not coming back at the rate he would hope.

“There are a lot of problems right now that I’m not sure anyone has a solution to,” Shaw said. “One of them is insurance. It is a big problem and is going to be even a bigger problem. It is not necessarily lack of insurance but the cost of it. We have clients that whether you had insurance, how much and what it was going to cost was never a factor in their decision making. Now, it is the premier factor. If you can get a quote, it is often too high. I’m seeing that in a lot of things.”

Cause for concern?

Shaw said he is particularly concerned about the slow pace of rebuilding in downtown Gulfport. Although the Hancock Bank building has been renovated and reopened, little else is going on in the downtown area of Gulfport where buildings received heavy flooding combined with wind damage.

“We are seeing some little things, but they are things that could have happened before the storm,” Shaw said. “They are not recovery driven or storm driven. There are no plans, for example, to rebuild three blocks of downtown. All the GO Zone work is going up in the northern part of the state for projects that were already earmarked before Katrina. To them, it is just cheap financing. It hasn’t helped us on the Coast at all, that I have seen. We’re seeing a lot of condominiums being built for doctors in Illinois. But that isn’t helping the people around here. While we’re building condominiums for doctors, we have people still living in FEMA trailers. There are a lot more people living in FEMA trailers than I would have thought we would have by this time.”

He does see positives such as the reopening of Caillavet Street in Biloxi, which was undergoing a widening project before the storm hit. Caillavet is a major north-south artery running from Beau Rivage Casino on U.S. 90 to the IP Casino on the Back Bay.

Another major positive is the reopening of the U.S. 90 bridge to Bay St. Louis. But especially in the hardest hit areas like Bay St. Louis and Waveland, progress has been slow.

“There is not a lot going on in Bay St. Louis now,” Shaw said. “That is unfortunate because Bay St. Louis is a nice artsy, funky town. But everything that got hit is not coming back.”

Long way to go

Henry Furr, H.H. Furr Architecture & Development, Ocean Springs, said while it feels like Coast residents are starting to get their feet back under them, there is a long way to go with plenty of obstacles.

“The insurance affordability issue is a major problem that is going to become a stumbling block for us,” Furr said. “It is not completely holding us back right now, but as more casinos do their development and other major employers try to staff up, the availability of reasonably priced housing is going to be more of a problem. People can afford to buy a house. It is maybe the insurance that they can’t afford.”

Furr said the situation is leading to microinflation because workers have to be paid more in order to afford a place to live. It can cost on average $300 per month for insurance on homes or apartments, so that much additional income is needed for workers.

Those extra insurance costs put a major crunch in the cash flow situation for investors such as owners of apartment complexes. Most banks will make commercial loans for apartment complexes for only 15 or maybe 20 years. Furr said banks may need to adjust that to reflect the insurance factor.

“I really think it’s a shame that the insurance industry isn’t doing true actuary numbers on this,” Furr said. “They are going to make enough in premiums for complete replacement cost on some structure in five years. It is not realistic that they will have to replace every new structure in five years on the beach. That needs to be adjusted. There needs to be some type of oversight of that rate. As a small state in the union without a big population, we have a bit of a problem to put pressure on insurance companies to adjust their rates. I don’t blame any company for making money because I very much believe in capitalism. But there are checks and balances, and now there doesn’t seem to be a check and it is out of balance.”

While the pace of recovery isn’t what people would hope for, more affordable homes and multi-family projects are selling. Homes and apartments under $250,000 are selling.

“That is a hot area of the market,” Furr said. “When you break out of that, it gets difficult. With land acquisition costs, building costs and insurance costs, when you get above $250,000, it gets very expensive.”

Bright spots

People are starting to see the light at the end of the tunnel with the progress on replacement of U.S. 90 bridges and the announcement of the major Harrah’s Margaritaville Casino on the south side of U.S. 90 in Biloxi at the former site of Grand Casino and Casino Magic. That $700-million project is expected to give a big boost to the local economy.

“That project is going to kick off and start turning dirt soon,” Furr said. “Palace Casino has some expansion plans. As we see some dirt turned on some of those big projects, that is really going to get people excited again. We are starting to move along. People are getting a little more optimistic about what is going to happen.”

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


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