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Housing surge

Coast housing expected to surpass pre-Katrina levels by 2011


After Hurricane Katrina, former Biloxi Mayor Gerald Blessey said the unprecedented damage meant that nothing short of a government program similar to the Marshall Plan instituted to help Europe recover from World War II would be necessary to help the region recover.

“The fundamental question is this:  Will the normal economic, administrative and judicial systems, even with generous private charity and federal emergency aid available under current law, be able to meet this extraordinary challenge in time to save Mississippi’s economy from collapse?” Blessey asked in an article published in the Mississippi Business Journal in late 2005. “I think the answer is no. We need more help, beyond current law and conventional wisdom. We need visionary leadership. We need a Marshall Plan for the Gulf states.”


Gerals Blessey

Gerals Blessey

Blessey said enormous capital had to be invested quickly, with little red tape but with visionary planning to recreate permanent jobs and new storm-proof residential neighborhoods in completely devastated pockets like Point Cadet in Biloxi, downtown Gulfport, Bay St. Louis, Pass Christian, Waveland and many others.


Now, nearing the four-year anniversary of Katrina, the Coast recovery has been just what was dreamed of. A study commissioned by the Mississippi Development Authority (MDA) estimates that by mid-2011, the amount of housing will be above its pre-Katrina levels in the three Coast counties.

“The people of the USA and the State of Mississippi, through their federal and state governments, did give the Mississippi Coast a ‘Marshall Plan,’ said Blessey, who is now Gulf Coast housing director for MDA. “Thanks go especially to the administrations of Presidents Bush and Obama, Mississippi’s congressional delegation, Sen. Daniel Inuoye, Rep. Barney Franks, Rep. Maxine Waters, Gov. Haley Barbour and the Mississippi Legislature.”

 MDA’s comprehensive housing study, the Mississippi Housing Data Project, shows that substantial progress has been made in replacing housing lost during Hurricane Katrina, as housing stock in mid-2008 was estimated at roughly 92 percent of pre-Katrina levels, up from just over 65 percent in September 2005, immediately after the storm.  

“Further, the study indicates that housing recovery is outpacing population recovery in the three Coast counties,” Blessey said. “When using population demand as a baseline, an oversupply of housing units is indicated. However, making existing housing units more affordable continues to be our top priority. Efforts are underway to convert existing market-rate housing units into affordable rental units. Also, the Gulf Coast Renaissance Corporation has launched the My Home/My Coast program to provide affordable mortgages for low-moderate income working families to purchase homes.” 

Housing units are projected to exceed pre-Katrina levels within the next 18 months. The housing study estimates that total housing stock in the three coastal counties will be at 104 percent of its pre-Katrina level by mid-2011.  

However, Blessey said the coastal counties continue to face a shortfall of units in the category of the deepest need for affordability, and therefore a top priority is to address that need through conversion of existing vacant units to affordable units and to construct additional affordable rental units to meet the deepest need based on income.

After Hurricane Katrina, significant focus was given to building back housing in a stronger, safer and more sustainable fashion. Blessey said all of the coastal counties and municipalities adopted stronger building codes, and many adopted stricter elevation requirements that reduce the risk for future housing loss. Covenants requiring building code standards, higher elevations and perpetual maintenance of flood insurance coverage have been attached to all housing units constructed using Katrina-related Community Development Block Grant (CDBG) funding.

Much of the new development is focused north of the coastline, in areas that did not experience storm surge flooding during Katrina.  

“In fact, many new development corridors have opened north of Interstate 10,as transportation and utility infrastructure continues to expand northward,” Blessey said. “The majority of projects being constructed through the state’s Regional Water and Wastewater Infrastructure program, which totals more than $600 million, are located north of Interstate 10. This project is enabling those who choose to live in areas with less surge risk to do so.”

The bad news on the housing front continues to be problems high insurance rates. Blessey said that is one of the major factors inhibiting housing economic recovery in coastal Mississippi.  

“However, insurance rates have fallen from the highs experienced immediately after the storm,” he said. “The state has infused some of its supplemental Katrina CDBG funding into the state wind pool, resulting in some reduction in insurance rates for coastal residents. Still, insurance rates are well above pre-Katrina levels. The state is currently conducting a study to establish construction-related best practices for retrofitting old homes and building new homes to standards of wind resistance higher than current codes, which should result in insurance rate savings for homeowners who meet the higher standards.”

The MyHome/MyCoast mortgage program attacks the higher cost of insurance indirectly by providing mortgages at lower than market interest to offset post-Katrina increases in insurance, taxes, utilities and construction costs. 

For many Coast residents, help came for repairing homes through MDA’s homeowner‘s assistance program that closed at the end of 2008 after about $2 billion in assistance was provided to 27,000 households.

“That was a program to deal with uncompensated storm surge loss,” said Lee Youngblood, communications director for the MDA Disaster Recovery Division. “You weren’t even required to rebuild since to rebuild on some sites would have required a lot of environmental clearances.”

The rest of MDA’s housing programs including the Small Rental Assistance Program, the public housing program and the long-term workforce housing programs, got started in the middle of 2008. About $750 million has been designated for housing programs on the Coast.

“Those programs have really begun in earnest now,” Youngblood said. “As we move into these programs, the Mississippi Housing Data Project study helps identify where the housing needs to go. We are using it as a guidepost. From MDA’s perspective, we felt like we needed to have a study that as we move forward in the housing programs that helped us target the different types of housing needed in different places.”

More than 1,000 new public housing units have been constructed on the Coast. Youngblood said the Coast will end up with more public housing than existed before Katrina.

“It isn’t public housing as you and I might traditionally think of it as a stark, no-frills development,” he said. “A lot of public housing units that we funded with the Katrina recovery package look just like a market-rate apartment. They are something the community can take pride in and residents can take pride in. They are complementary to the community in the long term.”

The housing study can be found at www.smpdd.com/housing/MississippiHousingDataProjectExecutiveSummary.pdf.


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