Katrina Still Bad for Business in Pass Christian

Mississippi's Gulf Coast is still rebuilding after Hurricane Katrina. In the hard-hit town of Pass Christian, residents still lack a grocery store and century-old family businesses operate out of trailers.

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DEBBIE ELLIOTT, host:

Today, we continue our look at the Mississippi Gulf Coast and how Hurricane Katrina is reshaping the economy there. Insurance costs and land values have soared since the storm, prompting a shortage of affordable housing and pushing smaller businesses off the beach. We're going to spend some time in the town of Pass Christian, nestled on a scenic peninsula surrounded by water. My guide is longtime state representative Diane Peranich.

State Representative DIANE PERANICH (Democrat, Pass Christian): See, isn't it gorgeous?

ELLIOTT: Yes.

State Rep. PERANICH: You can see the Mississippi sound off in the - those stripes, and somebody saw trace here where Christopher Columbus landed.

ELLIOTT: We're under a canopy of oaks in War Memorial Park at the center of town. Virtually all of Pass Christian was wiped out by Hurricane Katrina, but the park is back. There's a playground for children, picnic tables, a gazebo.

State Rep. PERANICH: But the main thing is that debris is gone. Think how wonderful that is. You know, you can take a deep breath now and smell magnolias or jasmine or salt air.

ELLIOTT: A stretch of trailers lines the grounds.

State Rep. PERANICH: So this has become the cultural center of the city and the home to our businesses.

ELLIOTT: The trailers house a sandwich shop and insurance office and a local bank, complete with a portable ATM out front. It's just across the street from the city's municipal complex, where city hall, the police station, and other offices are also in temporary headquarters, a conglomeration of trailers and tents set up on what used to be the city tennis courts. Representative Peranich takes me inside a doublewide on the edge of the park.

This is the library, which I learned has been the community hub since one month after the storm.

State Rep. PERANICH: It was the heart of the community. It held us together.

ELLIOTT: She introduces me to two women, waiting at a table amid the bookshelves.

Ms. SALLY JAMES (Manager, Pass Christian Library): My name is Sally James. I will be 69 years old this June, and hopefully be in my house by that time. I'm a lifelong resident of Pass Christian and I've been with the library system 24 years.

Ms. ALICE RUSSELL (Board Member, Pass Christian Chamber of Commerce): I'm Alice Russell. I'm representing the Pass Christian Chamber of Commerce. I am a former business owner. Forced to retirement. We owned one of the service stations right up on Scenic Drive that went for a swim that - we like to say a lot of our stuff went for a swim.

ELLIOTT: Alice Russell Stanley has been in Pass Christian for 100 years. Her father was longtime city alderman. She lost her brother-in-law to Katrina. The Russell's have owned several businesses: a nursery, a bakeshop and since 1978, the Russell Service Center, a full service gas station and auto repair garage in what used to be the city's main business district on a bluff overlooking the beach. But the family is in a dispute with its insurance company and has decided not to rebuild.

Ms. RUSSELL: Unfortunately, we weren't treated very kindly so. Our type of business was very expensive because it's an environmentally affected business, they being a garage and gasoline station. So we probably - that has a big bearing on it. The fact that my husband is 70 years old and to have to start completely over in that type of business, as a matter of fact, the children said, Daddy, I think it's time we just all did something else.

ELLIOTT: Other businesses have come back but mostly on the northern edge of town. There's a Laundromat, a gas station, a bookstore, a couple of restaurants and $2 stores, but still no Winn-Dixie.

Ms. RUSSELL: We don't have a grocery store in Pass Christian yet. So the dollar stores have picked up the slack. You can go buy bread, milk and eggs and coffee and peanut butter and, you know, at a dollar store.

ELLIOTT: But on the beach and right downtown, signs of commerce are sparse.

Ms. JAMES: The cost of insurance has paid a big, big role in the delay of people making decisions to come back.

ELLIOTT: Librarian, Sally James.

Ms. JAMES: Pass Christian businesses were mom like Alice's - mom and pop businesses, except for Wal-Mart. We had quite little - as all little towns have little restaurants, we also had two four-star restaurants, did you know that?

ELLIOTT: No.

Ms. JAMES: Yeah.

ELLIOTT: Sally James is worried about the local tax pays. Unlike towns further east like Biloxi and Gulfport, Pass Christian does not have any casinos or large shipyards within its borders. It's biggest revenue generators were the Wal-Mart and Winn-Dixie, which are not back yet.

She saw the town recover from Hurricane Camille in 1969, but wonders how will it come back from Katrina's hit.

Ms. JAMES: I hope I'll live 10 years longer so that I can see Pass Christian. It won't be the Pass Christian even after Camille that Allison and Diane and I saw, because we came back as small towns that we were after Camille. We'll see a new - I hope it won't be so far from the small community that we once knew that we wouldn't recognize it.

ELLIOTT: Well, how do you think you'll see that change? What do you think you'll see in 10 years?

Ms. JAMES: Well, I hope I don't see too many high-rise condos, I'll tell you that right off the bat.

ELLIOTT: New condo projects are underway on other parts of the coast, where people who lost their homes to Katrina have sold to developers.

Ms. JAMES: The thing I think that has most frightened me is that the condos that they're planning to built are so expensive. There's no one on this Gulf Coast that could afford to buy them. We need to work very hard not to have our Coastline become the California Coastline or the Miami Coastline, for goodness sakes.

ELLIOTT: These women don't want to see their small town way of life disappear as the Coast recovers. Back at War Memorial Park, State Representative Diane Peranich is hungry to share some of that local culture with me.

State Rep. PERANICH: There were many things you would do when you would come home if you were away, but you weren't official home until you hugged your mother and have a roast beef po-boy from Pirate's Cove.

ELLIOTT: Pirate's Cove was the spacious beachfront restaurant that had been a fixture here for 25 years. Now, it takes orders through the window of a 12 by 24 trailer in the park.

State Rep. PERANICH: We're going to have a roast beef po-boy so you'll know where have I speak.

Unidentified Woman: Hi. How are you doing?

State Rep. PERANICH: Hi. May I have four roast beef po-boys?

Unidentified Woman: You sure can.

State Rep. PERANICH: Dressed with gravy on the side and four Barq's root beers open.

ELLIOTT: I stepped inside to speak with the owner, Mike Lamarca.

Mr. MIKE LAMARCA (Owner, Pirate's Cove): One day we'll going to build back, not on the beachfront, but we are looking to get back - build back here in Pass Christian.

ELLIOTT: What seems the problem with trying to build back?

Mr. LAMARCA: Really the cost for me. I mean, the cost of the land, having to start from ground up. Buying a piece of land and then putting the building on it and then equipping it, and such as that for a sandwich shop, you know. We're not a biog corporation that can overcome big prices.

(Soundbite of fast-food order)

ELLIOTT: There's a steady stream of customers on this weekday afternoon.

Mr. LAMARCA: We did good for being downsized. Business has totally changed. We're kind of isolated, past the (unintelligible) sort of isolated. And so, for - there's only couple of businesses open down here, so I'm learning that since the hurricane that the delivery companies they don't come down here as many times as they used to. That's really been a big difference in taking care of business these days, you know.

ELLIOTT: Lamarca is searching for a permanent location now, but is a bit taken aback by the prices. One possibility is a new project in the works for a five-storey development that will include shops below condominiums. It's called Harbor Town, and it's being built as part of Mississippi's Smart Growth Plan.

Diane Peranich hopes that's not just new lingo for turning this little town into an overpriced beach resort.

State Rep. PERANICH: My concern is I want to see the same faces I have always seen. You know, while we could grow and expand in the prosperity that would possibly come. I don't want it to come at the expense of those who that are here. We had little shotgun houses for years. I don't want them displaced by what some may consider as progress or smart growth. We can have the best of both worlds, but we cannot have the largest transfer of property since the Great Depression.

ELLIOTT: Despite her concerns as Diane Peranich looks out over the trees in War Memorial Park, she has faith Pass Christian will survive.

State Rep. PERANICH: But you see, they took a terrible beating these magnificent oaks, but they didn't go over. Maybe we are like oak trees. We certainly are people that endure.

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Gulf Coast Economics Reshaped by Katrina

The Beau Rivage casino reopens in 2006. Credit: Justin Sullivan/Getty Images. i i

People arrive at the grand opening of the Beau Rivage Resort and Casino in August 2006 in Biloxi, Miss. While casinos have returned to life on the coast, many small businesses are struggling to find their footing in the wake of Hurricane Katrina. Justin Sullivan/Getty Images hide caption

itoggle caption Justin Sullivan/Getty Images
The Beau Rivage casino reopens in 2006. Credit: Justin Sullivan/Getty Images.

People arrive at the grand opening of the Beau Rivage Resort and Casino in August 2006 in Biloxi, Miss. While casinos have returned to life on the coast, many small businesses are struggling to find their footing in the wake of Hurricane Katrina.

Justin Sullivan/Getty Images

Part Two of the Series

Profound changes to the economy of the Mississippi Gulf Coast are under way nearly two years after Hurricane Katrina devastated the low-lying area. Labor is scarce and land values have risen to new heights.

The French first built ships on the Gulf Coast three centuries ago. Today, United States defense contractor Northrop Grumman operates a 600-acre shipyard where the Pascagoula River meets the Gulf of Mexico.

The company builds ships for the Navy, including the Truxton, DDG-103. It's a hulking vessel, 500-feet long and more than six stories tall.

Company spokesman Bill Glenn says the shipyard has been one of Pascagoula's major employers since 1938. Today, Northrop Grumman is the largest private employer in the state of Mississippi. The shipyard is still struggling to come back from the storm, but not because of structural damage.

"Our biggest need ever since Katrina has been people," Glenn said. "Right now, we need 400 craft jobs, 250 professionals."

The labor shortage, combined with rising insurance costs, forced another major employer, the Oreck Corporation, to leave the coast. The vacuum maker closed its Longbeach, Miss., plant and moved to Tennessee.

Northrop Grumman had 13,000 employees before Katrina. It is down to 11,500 today. With its average wage of $18 an hour, and a strong benefits package, Northrop Grumman has traditionally attracted workers from all along the Gulf Coast, from Louisiana to Florida.

But after Katrina, the competition for workers drove wages up. McDonald's offered signing bonuses, and skilled laborers could make more working construction than at the shipyard.

Right after the storm, Northrop Grumman went to extraordinary lengths to keep its work force. The company provided temporary housing on a barge in the Pascagoula River, paying workers even if their jobs weren't back on line yet.

Housing remains an issue of concern for area employers. But now the problem is more to do with cost than availability.

"Affordable housing is the No. 1 problem right now," Glenn said. "If we go out and recruit folks from other areas and want them to move here, 'affordable' is the main word. Can they afford to live here?"

Online ads feature homes with prices more than double what they would have cost before Katrina. A 2-year-old brick home in Ocean Springs, Miss., is selling for $350,000. A nice house in the same area might have cost about $120,000 before the storm. It's not the dynamic people expected after Katrina's destruction.

"It's like gold," banker D'Auby Schiel said. "There's this sort of [land] frenzy."

Schiel is chairman of the board and CEO of Community Bank of the Coast, based in Ocean Springs. She says some families with homes here for generations found it too costly to rebuild once they factored in stricter building codes, and insurance premiums that have jumped as much as 150 percent. They're selling, opening up prime waterfront lots to speculators.

The premium property lines U.S. Highway 90, the road that follows the coast. Before Katrina, the landscape here was an odd mix of modest neighborhoods, local shops, stately ante-bellum homes and, in the last decade, glitzy casinos.

The casinos are back — some even bigger than before. But Schiel says developers are bundling much of the rest of the land into tracts for large condominium projects. That's squeezing out working-class folks and small businesses.

"And I don't know that they'll ever be back because that corner on the Highway 90 in Biloxi would now be, maybe, a $2 million piece of property," Schiel said.

What you'll see instead, Schiel predicts, are smaller, mom-and-pop retail stores and affordable residential developments moving inland.

That worries community activist Derrick Evans of Gulfport. He's concerned that the recovery on the coast favors what he calls big-box economic development, at the expense of what made the region unique.

"I mean, who wants to drive from Arizona to go eat at a Hooters?" Evans asked. "They want to come to coastal Mississippi to get a shrimp sandwich, or a barbeque sandwich, in a more culturally rich situation."

Evans is critical of the state legislature for quickly passing a law that allowed casinos to rebuild on land, instead of on the water, which was the policy before Hurricane Katrina. Many on the coast argue that the casinos are the economic engine of the coast, and restarting them was vital to the rest of the economy. Evans does not agree.

"It's really unfortunate for neighborhoods, and older communities, and small business owners, who are still trying to figure out where there is capital available for them to either rebuild or start new," Evans said.

Local businesses have banded together to tackle these issues. They've formed a private, not-for-profit corporation to build 10,000 affordable homes so workers can stay on the coast, close to where the jobs are.

But Mississippi Gov. Haley Barbour (R) says it may not be possible to return to the way things were before the storm.

"The Mississippi Gulf Coast is one of the few areas of the country where not only working-class people, but literally poor people, live a stone's throw from the water, where they could see the water," Barbour said.

The governor says he expects that to change, with the coast sprouting higher-density developments, including high-rise condominiums. It's the flood of money following Katrina that will change the character of the coast for good.

Tomorrow — in part two of this story — a visit to one small Mississippi town where residents are determined to stay together, while getting back to business.

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