Thinking about the Future of New Orleans
by William J. Byron, S.J.
After three post-Katrina visits to New Orleans, including an on-the-ground inspection of the famous lower 9th, I'm hopeful, but hesitant to make any predictions. Ray Nagin has been re-elected to the toughest job in municipal government in America. Mitch Landrieu is more committed than ever to the resurrection of his home city, and will do all he can to help as he continues to serve as Louisiana's lieutenant governor. Both, I suspect, would acknowledge that the locus of decision-making in this mammoth recovery effort is still hard to find. During their recent run for mayor, one observer said to me, "Whoever wins is going to find himself sitting like a kid in the back seat of a car with a toy steering wheel in his hands. It won't be connected to anything."
Big problems often have no hope of being solved except for big government. This is the case right now in New Orleans. Without falling into the trap of substituting blame for analysis, I would have to say that insufficient support has come to date from the White House.
The Bush Administration declined to endorse Louisiana Republican Congressman Richard Baker's legislative proposal to establish, with heavy federal funding, a Louisiana Recovery Corporation (LRC), which would come to the post-Katrina rescue of homeowners in flood-devastated areas of the state. LRC would step in to buy out the homeowners, who cannot now make mortgage payments on ruined properties, giving them no less than 60 percent of their pre-Katrina equity and thus saving them from default on their mortgages.
Similarly, lenders (mortgage holders) would, under the Baker proposal, be offered (and accept as payment in full) up to 60 percent of what they are owed. Financing of all this would come from the sale of bonds (remember the World War II song, "Any Bonds Today?"), which would be paid off, partially at least, by proceeds from the subsequent sale of land to developers. Private development would then become the engine of reconstruction.
The LRC would pay off the lenders and finance (with the needed help of additional federal dollars) restoration of public infrastructure. In the case of New Orleans, LRC would buy up large tracts of ruined neighborhoods, flatten them out and clean them up, and sell them to developers so that replacement housing and related facilities like stores and schools could be built. Pre-Katrina homeowners, saved by LRC from financial ruin, would be first in line to purchase new housing. Trouble is, it's not yet clear who will decide where the new housing will be built or where and when new communities will emerge.
I've been thinking about the section of New Orleans known as City Park. From a central clubhouse, three 18-hole golf courses spread out across many acres of land that could be transformed into attractive building sites. True, Katrina caused a lot of damage there as well, but I wonder why a "swap" could not be arranged that would relocate the public golfing acreage to the lower ninth ward or thereabouts, where, instead of rebuilding homes, residents could move to a "new city" in the old City Park. The new housing would have to be protected from future flooding, of course, and some portions of the now-devastated neighborhoods in the east could be rebuilt for public recreation, while other sections could be rebuilt for residential and business use.
Decisions about the level, strength, and construction of levees and flood walls have to be made before any solid plans become firm. Then there is the unanswered question of who decides. Another big question relates to the presence or absence of political will to provide the needed funding. These questions are tucked away in the trunk of the elephant sitting in every policy-deliberation room in Washington, Baton Rouge, New Orleans, and other interested jurisdictions. That elephant goes by the name of "Who's Going to Decide."
As one who thinks Republican Representative Baker's plan is a good one, I regret that his party leadership will not sign on. Some with memories as long as mine will recall the Democratic Party's New Deal initiative that established the Home Owners' Loan Corporation. It literally saved the day for one million homeowners between 1933 and 1936. That was big government, FDR style. More of that is needed now.
Wouldn't it be great if we all could get together to work this one out for the good of a city and state that are genuine American treasures? We can, but I'm not ready to predict that we will.
William J. Byron, S.J. is an economist and Jesuit priest who served as dean of arts and sciences at Loyola University New Orleans in the 1970s and returned as interim president in 2003-2004. He is now research professor in the Sellinger School of Business at Loyola College in Maryland. He is a member of the Board of Directors of Friends of New Orleans. E-mail: wbyron@loyola.edu
