New Orleans Starts Out on the Road to Recovery

Business is beginning to stir again in New Orleans, as the storm-ravaged city goes through the stages of damage assessment, cleanup and repair.

For the overwhelming majority of businesses, the cash registers aren’t ringing yet, even where there is electricity to plug them in. Owners are starting to examine their shops and offices, file claims with their insurers and register with the Federal Emergency Management Agency for possible aid.

Business owners started returning Tuesday morning to New Orleans’ central business district -- what locals refer to as the CBD -- spurred by radio announcements from government officials that they were being allowed downtown to inspect for damage and retrieve documents and other valuables.

There was confusion about the terms of the relaxation of the ban on civilians entering New Orleans. Mayor C. Ray Nagin, in a news conference Tuesday afternoon, apologized for the communications snafu and said that the CBD wouldn’t officially reopen until next week, possibly as early as Monday.

“We screwed up,” Nagin said. “We gave out a bad phone number. It wasn’t very well implemented.”

Still, businesspeople generally were making their way through police and military checkpoints, flashing identification and business-related documents. There was a tie-up on the River Road at the city’s western boundary, as the usual convoys of emergency, police and military vehicles, utility trucks and heavy-equipment carriers were joined by a new stream of sedans and SUVs driven by business owners trying to get a look at how their shops and offices fared under the assault of Hurricane Katrina.

Downtown hotels already have been abuzz for several days with cleanup and construction crews. The city made them a priority because officials involved in the reconstruction need a place to stay. A couple of bars in the French Quarter have stayed open serving warm beer almost since the hurricane winds subsided, manned by bartenders who stayed put during the storm.

Heavy industry also got an early start on recovery. Northrop Grumman Corp.’s Avondale shipyard on the opposite bank of the Mississippi got back to work earlier this week, and dockworkers at the Port of New Orleans are scheduled to unload their first post-hurricane container ship -- carrying coffee -- this morning. Norfolk Southern Corp. restored freight rail service to New Orleans after completing repairs on five miles of washed-out rails on the Lake Pontchartrain railroad bridge. In addition, the first commercial flight landed at Louis Armstrong New Orleans International Airport.

But for many small-business owners, Tuesday was the first opportunity to see the damage firsthand.

“It looks like I’m not going to be paying income taxes for a couple of years,” joked Michael Mahoney, who quit his career as a banker four months ago and opened an art-framing shop on trendy Magazine Street near downtown. It was just starting to build a clientele.

He found the shop “just the way I left it,” with no water damage and no signs of looting. “I didn’t even lose my awning,” he said.

When the electricity and water service come back, Mahoney figures he can reopen, but he doesn’t see much of a future, given the financial blow taken even by upscale New Orleans residents who would be his likely customers.

“This is a discretionary business,” he said. “From the information I can receive, this is going to put me out of business.”

Greg Dombourian, whose family rug shop on Magazine Street was founded in 1910, didn’t make it back to see his shop on Tuesday, but said in a phone interview from Baton Rouge, La., that he figured it would take three months to reopen. Dombourian, who is on the board of the 180-member Magazine Street Assn., figures it will take that long to get power back on, get things cleaned up -- and have customers to sell to.

Finding customers wasn’t a problem for Bud’s Broiler on Clearview Highway in the western suburb of Metairie. People who have been subsisting on granola bars, beef jerky and -- when they’re lucky -- handouts of military meals ready to eat -- lined up in the parking lot for a shot at charcoal-grilled chicken and hamburgers.

Some pharmacy chain stores, a couple of big home-improvement and hardware retailers and a handful of gas stations had been open for days in the neighborhood, but very few restaurants were serving, and the smell was tantalizing.

Craig Collier, whose daughter, Virginia, owns the small franchise eatery, said they had hoped to open sooner, but the lack of running water kept them closed until 11 a.m. Tuesday. But for a brief lull in mid-afternoon, there were long lines all day.

The nearby franchise warehouse, where Bud’s normally gets its meat, was under about 8 feet of water, Collier said, so they scrambled to find a backup supplier.

“We could only get Black Angus beef,” Collier said. “That’s a better cut, but it’s much more expensive.”

That’s why a hand-lettered sign at the counter said: “Burger or chicken combo $6.50. Prices are temporarily higher.” Normally, the combo goes for $4.50, Collier said.

Not far away, in the parking lot of a Lowe’s Home Improvement outlet that has been open for reduced hours since Sept. 7, a crew of workers for Nationwide Restoration & Cleaning Services gathered for instructions from their supervisor, Wayne Westcott.

Nationwide Restoration, part of a small local chain, has been working flat out since Labor Day, tearing soaked carpeting and woodwork out of office buildings and preparing for the heavy-duty cleaning job to follow, Westcott said. The workers stopped at Lowe’s for squeegees; they had visited a nearby Home Depot earlier for wet-vacs.

“We’re not having any trouble getting supplies,” Westcott said.

The firm normally has 50 to 75 employees, but it has bulked up to hundreds, as workers have poured in from an affiliate in Florida, Westcott said. Nationwide Restoration does residential and commercial jobs, but now it’s concentrating on about 200 commercial customers in and around New Orleans, which is all the work it can handle, he said.

Behind the scenes, meanwhile, investors already are looking for opportunities to profit from what they hope will be a robust recovery.

“I have a number of top clients of major-league size who are trying to buy any kind of property in the city they can,” said New Orleans real estate lawyer Marx David Sterbcow.

He declined to name the companies but said three were searching for properties before the storm and their interest was unabated. Two more came calling after the city flooded. The projects they’re looking to build include high-rise condominiums, retail centers and office buildings.

After the storm, 80% of New Orleans was underwater, and there was deep concern about the city’s economic future. That has abated somewhat as cleanup efforts get underway, although such issues as the widespread environmental damage suffered by the city and nearby areas could be a serious impediment to recovery for years.

Such concerns are serious enough to make many commercial property owners nervous, Sterbcow said from his temporary office in Baton Rouge.

“Nervous people tend to do stupid things,” he said. “As soon as properties come available, my folks are going to pull the trigger.”

What gives the developers such faith, Sterbcow and other real estate experts here said, is the abundance of incentives they believe the government will supply to those who rebuild. These are expected to include tax, building and employment incentives.

“A week ago, New Orleans looked like the apocalypse,” Sterbcow said. “Now it just looks like a bad Mardi Gras. Next it will be a boomtown.”

Others are only slightly less bullish. In May, a Florida development group bought a one-acre downtown parking lot and announced plans to build a 60-story condominium. Last month Donald Trump Jr., son of the New Yorker developer, brought his name and resources to the $200-million luxury project, which would be the tallest building in the city.

The storm has forced the developers to put Trump International Hotel & Tower New Orleans on hold, but only until “things start getting back to some normalcy,” partner Cliff Mowe said from his office in Pensacola, Fla.

He estimated that period at less than a year.

“We’ve had storms here in Pensacola, and the market has always come back bigger and better,” he said. “That will be true of New Orleans too. The people want the city back.”

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Mulligan reported from New Orleans, Streitfeld from Baton Rouge. Staff writers Nicholas Riccardi in New Orleans and Claire Hoffman in Los Angeles contributed to this report.