As many of you know, New Orleans is my hometown, and our practice is headquartered in a suburb, high and dry and away from the utter wreckage and devastation of Hurricane Katrina. While I travel on business, many ask where I am from, and when I answer, “New Orleans,” everyone follows up with “...so how is it going there?” Here's an update.
The rebuilding process in New Orleans and the surrounding Gulf Coast markets is the largest, single construction project in the nation's history. When the final tally is in 10 years from now (and it will take 10 years), the cost of the recovery could exceed $200 billion, almost double the cost of the entire Interstate Highway system. Considering that the highway system took more than 40 years to build, the sheer logistics of compressing a construction effort the size of rebuilding our city and region into a single decade is mind-boggling.
The effort is more challenging because we don't have a Rudy Giuliani spearheading the recovery. Our mayor and governor are well-meaning, but both are overwhelmed politicians trying to implement a rebuilding effort of biblical proportions. Just think: When we are all done, 100,000 to 200,000 homes will have been repaired or bulldozed, and that doesn't even take into consideration thousands of commercial buildings that must be repaired or demolished.
Recently, I met with the people at Hanley Wood Market Intelligence, the residential housing research arm of the company that publishes THE CONCRETE PRODUCER. Their up-to-the-minute data on the New Orleans housing market shows how slowly the recovery is coming:
The federal role
The federal government had committed about $107 billion in aid to the region, with nearly one-half of that for emergency and longer-term housing. This does not include $15.5 billion already paid by insurance companies for homeowners' flood and casualty policies; more settlements will come.
And beyond these amounts, Congress has passed legislation allowing us to keep a larger portion of offshore oil production royalties, ensuring the funds necessary to rebuild eroded coastal wetlands. This important effort, which will restore the historical barrier between our city and the ravages of future hurricanes, is also estimated to cost tens of billions of dollars, and will take until 2040 to complete.
Even though the rebuilding effort in the commercial and residential sectors is a 10-year pull, Hanley Wood Market Intelligence feels that federal funding will start fading by the end of the decade. By then, we hope the area will be self-sustaining economically and will be able to return to its pre-Katrina prosperity.
Flying into New Orleans' airport, you can see dozens and dozens of square miles of abandoned neighborhoods with scarcely a car or truck in sight, still dotted with the ubiquitous blue tarp roofs that FEMA spent a fortune nailing up all over the city. But each month, the number of blue roofs dwindles and the numbers of pickup trucks on the abandoned streets increases, indicating a recovery, slower than hoped, but a recovery nonetheless.