Construction boom: Katrina's silver lining in New Orleans

NEW ORLEANS — The city is a rarity in 2009: a place full of hard hats and big building projects and subcontractors roaring around in pickup trucks. A city where home prices have dipped only slightly, and where the unemployment rate is 5.3 percent compared with 8.1 percent nationwide in February.

New Orleans, it seems, has largely dodged the Category 5 recession pummeling the rest of the country, thanks to its unique post-Hurricane Katrina economy. For locals accustomed to bad luck and trouble, the good news can feel a little strange.

"It's totally bizarre because, normally, we're the worst in everything," said Brennan Manale, a clerk at shoe shop Bella Rouge.

Jennifer Mansfield, a worker at a busy French Quarter gift store, put it this way: "I can't tell how bad it is in the rest of the country because it's so normal here. Well, normal for New Orleans."

That qualification — "normal for New Orleans" — is a crucial one. The old cankers of crime, low wages and corruption still fester, and neighborhoods remain choked with more than 68,000 vacant homes, most moldering since the storm and its resulting flooding in August 2005.

But some aspects of New Orleans' "new normal" have resulted in an enviable economic picture compared with the global meltdown.

Many chronically unemployable locals moved away permanently, keeping the unemployment rate low. Meanwhile, a steady trickle of pre-Katrina residents has been coming back to town with plans to fix up old homes, creating a demand for renovations.

Perhaps most important, the federal government al

The recovery dollars are paying for projects large and small, including an $800 million replacement of the damaged "twin span" bridges over Lake Pontchartrain and thousands of homes being fixed under the state-administered Road Home program. The Army Corps of Engineers continues to use contractors to strengthen the levee system. In working-class neighborhoods such as the Ninth Ward, laborers are pounding away on small-scale renovations.

"Katrina was a horrible nightmare, but the reality is that, for the construction industry, it's been a blessing," said Theresa Leger, a vice president of Landis Construction, a local firm that has remained busy since the hurricane.

While nationwide construction employment fell more than 10.2 percent in January, in New Orleans it jumped 5 percent.

Construction jobs have dipped a little since then, according to the state work-force commission, but economists said the building industry likely will buoy the New Orleans economy for years.

The delay in spending that money can be attributed, at least in part, to bureaucratic infighting and ineptitude.

Ironically, those same delays could end up helping the city, said Ivan Miestovich, director of the Institute for Economic Development and Real Estate Research at the University of New Orleans.

"That $19 billion is going to keep a lot of people in the construction industry and related fields working," he said.

After the floods, contractors from around the country poured into New Orleans to take part in the recovery. More recently, a second wave of workers has arrived, fleeing the moribund construction business in their hometowns.

Alvin Johnson, the human-resources manager for Ellis Construction, said that a year ago, it was difficult to find good superintendents for the company's numerous New Orleans building projects.

"Now they're everywhere," he said.

One of his recent hires, superintendent Roger Charboneau, is overseeing a 51-unit apartment complex built in a common post-Katrina style: the first floor is jacked about 12 feet above a ground-level parking garage.

Charboneau, 50, had been an independent builder in Central Florida until the housing bust dried up his prospects. He and his wife were initially wary to move: they imagined New Orleans in ruins.

When they arrived, they were pleased to discover that swaths of the city were back to normal. "We said, 'Gosh, this is totally functional here,' " he said. "It's a real nice city."

The destruction of so much housing has had one upside: the diminished supply and a growing demand have spared New Orleanians from the wealth-destruction that has buffeted the rest of the country.

Housing prices declined just 2.1 percent in the fourth quarter of 2008, said Mike Chriszt of the Federal Reserve Bank of Atlanta. Nationwide, the decline was 12.9 percent.

In other ways, New Orleans hasn't been immune to the broader financial meltdown. Here, as everywhere, 401(k)s have taken a hit. The decline in global trade has been felt at the Port of New Orleans, where cargo declined by 20 percent in the fourth quarter of 2008, spokesman Chris Bonura said.

Observers are worried that job losses outside the city could deal a serious blow to tourism, New Orleans' most important industry.

Though tourism has not returned to pre-Katrina levels, there are signs it is holding steady compared with more recent years. The convention and visitors bureau estimated Mardi Gras attracted 1 million revelers, about 200,000 more than the year before.

Kelly Schulz, a visitors-bureau spokeswoman, said the city's 2009 convention bookings are up from 2008.

New Orleans is benefiting from what Schulz called the "AIG effect," in which companies, fearful of being pilloried for profligate habits, choose New Orleans for conventions over ritzier locales.