JANUARY 2006

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THE GULF COAST RECOVERY



Mississippi Yearning

"I am a seventh generation Mississippian. My family has seen us survive disasters before. The worst disaster, man made not natural, was the Civil War. We were devastated, and back then there was no one to help us. It took till after World War II to get back to recover. After the great flood of 1927, the federal government tried to help us.
The Hoover Commission's work got lost in the Depression, and we stayed on the bottom. After Camille in 1969, another opportunity was lost. Nothing changed. After two months they were building service stations on the beach. I'm determined we will not miss this fourth chance. We must not fail our citizens."

— Mississippi Gov. Haley Barbour,
in a speech to legislators in the fall of 2005

   In a speech in the fall, Mississippi Gov. Haley Barbour reminded listeners that since the French settled the Gulf Coast in 1699, a lot of infrastructure "had been built and rebuilt and rebuilt over the last 306 years. That infrastructure was mostly destroyed not damaged but destroyed" by the 2006 hurricanes, he said. He welcomed President Bush's proposed "Gulf Opportunity Zone." And even though some $30 billion of federal money is expected to flow into the recovery efforts, Barbour also welcomed the federal government's recognition of the role that private capital would play. Hovering over his entire strategy is the aim to make things better than they were.
   "The governor proposed that if all we did was rebuild, there would be a permanent scar — he challenged us to make it better," said renowned new urban planner and architect Andres Duany in a November speech at the GreenBuild Expo in Atlanta. Duany had helped lead a seven-day charrette of planners, developers and citizens convened by the Mississippi Commission on Recovery, Rebuilding and Renewal, an organization headed by former Netscape and FedEx executive Jim Barksdale. Duany took seriously the Governor's idea that things had to be remade better than they were in the 11 communities on which the charrette focused. "It's a place that hasn't had a break in terms of public reputation in 100 years," he said of Mississippi. As for the Gulf Coast, "they have 120 miles [km.] of beachfront," observed Duany, the designer of Seaside, Fla. "I wouldn't be surprised if it becomes as popular as a place like Portland [Ore.]."
   Duany's endorsement of Portland does not come lightly. "You can recruit talent to Portland all day, and out-compete Dallas," he said to a Portland planner after his speech. "People want to live there despite the weather." Gulf residents and businesses hope the same holds true for them. As one familiar with the frequent drudgery of the public planning process, Duany and other participants found the focus of the Renewal Forum refreshing. "Nothing clears your thinking like an emergency," he said of the proceedings. "It's unusual in America to do things fast and efficiently."
   The Renewal Commission aims to do that via a number of committees, though an industrial committee is not among them. That said, the role of industry is vital, says Jerry St. Pé. St. Pé is former President of Ingalls Shipbuilding (purchased in April 2001 by Northrop Grumman) and retired executive vice president of the shipyard's parent company, Litton Industries. The New Orleans native came to Pascagoula as a reporter in 1958. A founding member of the Mississippi Partnership for Economic Development and member of the board at Southern Co., he's seen his share of weather and economic growth in the ensuing 47 years. Asked if the renewal effort needs to maintain the balance between industry and tourism, he says there's not much question it does.
   "Clearly industry — if you include manufacturing and those businesses that support manufacturing and the military presence — far exceeded tourism, even with gaming," he tells Site Selection. "Clearly there is a need to maintain the balance. I also chair the Mississippi Gaming Commission, and I told a reporter yesterday that that industry is just so vital to the coastal economy. Fortunately, they're already on the way back, announcing rebuilding of the casinos and restaurants in a much grander fashion than previously existed prior to the hurricane."
Florida Always Battles Back
H
urricane Wilma was the eighth hurricane to strike Florida in 14 months. The speed of its passage spared many from the speed of its winds, but prolonged power outages took a significant toll on manufacturers on both coasts.
   All told, insured losses from Wilma could reach $10 billion, trailing only Katrina and 1992's Andrew as the costliest in U.S. history.
   But even as roofs on both coasts took on even more blue tarps, progressive development was unfolding. St. Joe Co., for one saw positives amid the negatives.
   Even with reduced tourism, "the storms may have created some long-term economic development opportunities for Northwest Florida," said St. Joe Chairman and CEO Peter S. Rummell in a third-quarter earnings call. "For example, traffic at the Port of Panama City has increased significantly as a result of the damage sustained at the Port of New Orleans. The Port of Panama City is one of the few deep water ports on the Gulf Coast — and if it is eventually linked with the relocated airport, Bay County has the potential to become an intermodal transportation center."
   "Katrina reminds us why good planning is so important to coastal living," continued Rummell. "It highlights one more reason why the effort to relocate the Panama City airport to an inland location beyond the storm surge zone makes so much sense. It also emphasizes the practicality of moving a segment of U.S. 98 at WindMark Beach, now well under construction, off the beach and appropriately inland."
   On September 29, 2005, subject to approval by the Federal Aviation Administration, the Panama City Bay County Airport and Industrial District voted to enter into a land donation agreement with St. Joe Co. for approximately 14,000 acres (5,666 hectares) in northwestern Bay County for a proposed new airport site and an associated environmental mitigation area. Upon meeting the agreement's specified conditions, St. Joe has committed to donate a 4,000-acre (1,619-hectare) airport relocation site. The FAA's final decision is expected in early 2006.
   In the meantime, the airport authority is inviting bids on its current 713-acre (289-hectare) site until February 7, 2006.

   Indeed the casinos are rebuilding fast in the same places where they were swept clean. And a condo project is proceeding apace on Biloxi's back bay. But St. Pé says industry is seeing the green light too: "I'm also chair of the Jackson County Economic Development Foundation," he says, "and interestingly enough, the pace of inquiries has picked up in terms of high-tech. In this county, we've had a couple prospects we were dealing with prior to the hurricane, and they haven't backed off at all."
   During his 40 years with Litton, says St. Pé, there were a handful of major hurricanes, though nothing approaching the devastation of Katrina. "But without exception the communities along the coast came back and the economy came back stronger," he says. "A lot of that has to do with the construction and reconstruction associated with large industries and large corporations like Chevron, which has its premier refinery here.
   "At the shipyard, we found ourselves having to undertake major recovery after Camille in 1969," he explains, "and we piggybacked, not just restoring to pre-hurricane conditions, but using it as an opportunity to make capital investments we may have delayed for some period of time. We did that on at least two occasions after hurricanes. It's not just a one-for-one sort of recovery. Businesses, when they return, will be more efficient and competitive in the marketplace. And I could make a case that the labor force will be more skilled."
   Over and above the business climate, St. Pé credits the state legislature's 2005 recrafting of incentives legislation, as well as the state's ongoing reputation for meeting its commitments to business and industry, "not just recruiting to the area and saying 'fend for yourself.' I watched it when I worked for Litton Industries," he says, "people constantly fighting in other states to keep government off their backs."
   St. Pé says neither the state nor its municipalities have seen their bond ratings affected. Nor are companies unduly panicked: "Let's look back at Hurricane Camille," he says. "So every 35 years you have some risk. Well, by then your asset is used. There is not a lot of hand-wringing going on."
   Asked about the danger of placing too much emphasis on gaming and tourism, Will Longwidth, spokesman for the renewal commission, says the commission's Defense and Government Contracting committee, chaired by St. Pé, is one of the ways the industrial recovery is being approached. Another is via the Committee on Agriculture, Forestry, and Marine Resources, one of whose main goals is the full recovery of the Port of Gulfport. That facility is just part of the transport challenge.
   "Our ports, railroads, and the Gulfport-Biloxi International Airport — essentially the Coast's entire intermodal network — was seriously damaged," said Mississippi Central District Transportation Commissioner Dick Hall in testimony before the U.S. House of Representatives in October. "Not only is the replacement of all this infrastructure absolutely necessary, but how and with what it is replaced is of utmost concern." The bridges over Biloxi Bay and St. Louis Bay are projected to cost $400 million, while the rebuilding of U.S. Highway 90 could cost as much as $695 million.
   Meanwhile, while gaming as a recovery strategy was off the table as quickly as it was on in the City of New Orleans, Longwidth says in Mississippi the casinos are there to stay.
   "There is no question that the Mississippi Gulf Coast was a tourist destination before the hurricane, and that it will be an even bigger and better attraction in the future," he says. "Our goal is to make the Mississippi Gulf Coast a tier-one tourist attraction, and we are identifying the things we need to do to get there. Gaming is a massive economic engine on the Gulf Coast — that's just a fact. Casinos provide tens of thousands of jobs, plus all the supporting businesses and industries they attract. Are the casinos the end of the economic discussion? No. But they are a big part of the total picture. They have already started rebuilding, and they have committed to pouring billions of development dollars into the area. They're not the only answer, but they're a great partner to have while we pick ourselves up off the ground."

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