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New Orleans, without a tax base, needs businesses and workers

NEW ORLEANS—Six weeks after Hurricane Katrina breached levees, flooding the city of New Orleans, Dr. Kelly Longdon, her husband and their three children are heading to Orlando, Fla.

And they're not coming back.

Meadowcrest Hospital, just outside New Orleans, where Longdon worked, hasn't reopened. With her husband's job as an airline pilot and her marketable skills, the couple decided to leave the Big Easy.

"There's just too many doctors and not enough places to put them," she said. "We would have stayed. Our house wasn't really damaged, but after all was said and done, we took a look at where we lived and decided it was just too miserable. The traffic was awful, you can't always get food, we lost our child care and the schools are closed."

Retaining professionals like Longdon is just one of the many challenges facing New Orleans as the city begins to rebuild after Katrina caused levees to breach, flooding 80 percent of the city and destroying or severely damaging 65 percent of its housing.

New Orleans still has the pillars of the local economy—tourism, shipping, manufacturing, and petroleum and chemicals. The French Quarter, the city's tourism trademark, and central business district remain largely intact.

But the challenges are daunting.

Municipal revenues have been reduced to barely a trickle, which forced the city to fire 3,000 workers last week. Even the local Catholic archdiocese had to lay off almost 900 employees as the pews sat empty.

Businesses are struggling with a lack of workers, particularly unskilled and low-skilled ones, who were displaced by Katrina and have nowhere to live should they wish to return.

The destruction of the city's two major hospitals and medical schools and the damage that has closed city schools have led some to fear that the skilled, highly paid professionals who worked there and in related industries may be persuaded to take their skills and families elsewhere.

And with the city council, the mayor and the governor each appointing a commission to study how to rebuild the city, no one vision has yet emerged to lead the way.

New Orleans Mayor Ray Nagin last week hinted at his own vision, when he announced an ambitious proposal to build a casino district in downtown, involving several existing hotels, to jumpstart the tourism industry. The city already has legalized gambling but is limited by an exclusive agreement between Harrah's casinos and the state.

The good news, said James Richardson, a Louisiana State University economist, is that Katrina didn't devastate the underpinnings of New Orleans' economy.

The Port of New Orleans _the nation's fifth busiest—escaped major damage, and barge traffic resumed this past week on the Mississippi River. Convention business is bound to bounce back, and Mardi Gras will go on in the French Quarter.

New Orleans, which represents 35 percent of Louisiana's economy, still is home to manufacturers such as Folgers and Procter & Gamble, said Don Hutchinson, the city's director of economic development.

New Orleans' leaders, though, must give people a reason to move back, said Bruce Sharky, a professor at Louisiana State University.

"Although New Orleans is a destination city for tourists, economically it has been deteriorating since the 1960s," Sharky said.

It's the only major southern city that has lost population since 1960, dropping 26 percent from 627,525 to 462,269 in 2004, according to the U.S. Census Bureau. Most experts believe the city's population now will sink to around 250,000.

The key to getting back to business is finding workers, business leaders say. And that, they say, means finding a quick fix to the lack of housing.

Temporary housing has been set up in surrounding communities and even as far away as Baton Rouge, the state capital some 90 miles up Interstate 10. But business leaders say that with the price of gasoline hovering near $3 a gallon, they doubt many workers could afford lengthy commutes.

Competition for help, particularly for unskilled and semi-skilled workers, is fierce. Popeyes, a locally founded fast-food chain, gave crew members and assistant managers a $3-an-hour raise and offered a percentage of profits to store managers. The chain also gave workers two weeks' pay upfront and is offering a $50 bonus for each new worker they recruit. Burger King is offering $6,000 signing bonuses to new workers.

In contrast, there are no jobs for many of the city's most skilled workers.

Katrina devastated the city's hospital system, which employs thousands, shutting its two largest hospitals, Tulane University Hospital and Louisiana State University Charity hospitals, and their associated medical schools, said John Matessino, president of the Louisiana Hospital Association.

Charity's two hospitals were destroyed. Charity had been planning to build a large hospital in New Orleans, but now is talking of building it in Baton Rouge and building a smaller facility in New Orleans, Matessino said. Tulane's repairs will take several months.

Whether health care professionals, scholars, researchers and the biomedical industry—which some saw as a big growth opportunity for the city—will be here when the hospitals come back is a worry.

"It's hard to quantify how many (medical professionals) are at risk of flight from the state, but it's huge," said Dr. William "Kip" Schumacher, CEO of The Schumacher Group, a physician staffing and management company.

The school system is facing a similar problem.

About 120 school buildings in New Orleans and Orleans Parish were damaged, said Steve Alschuler, a spokesman for the private firm that manages Orleans Parish's financially strapped public schools. Just a dozen schools are expected to be able to reopen in November.

How many of the system's 3,788 teachers, now on disaster leave, will come back depends on how many of the 55,000 students return.

"We told our teachers they should apply for work wherever they can find it and told the kids go to school where they can," Alschuler said.

Planners talk about the hurricane being an opportunity to improve New Orleans, to address the problems of poverty and crime, to remap the city's terrain—raising the controversial idea of bulldozing low-lying neighborhoods—to lessen chances that future storms will cause similar damage.

Tulane University, the city's largest employer, plans to fully reopen by January, said university President Scott Cowen, which will provide a major economic engine for the city. He also expects the health care industry to rebound within five years.

Cowen, who sits on the mayor's Bring New Orleans Back Commission, said Tulane will devote much of its resources and expertise within its professional schools to developing a master plan and rebuilding New Orleans, he said.

"We consider it a community project," he said.

But with New Orleans' population expected to shrink dramatically, some residents worry that in all the planning, the city will lose the exotic flavor created by its history, its culture and its neighborhoods.

John Ward, who owns National Art and Hobby on Magazine Street, said the racial and economic mix is what makes the city great, especially in his Uptown neighborhood, where rents and home prices had been increasing rapidly.

"I've had (actor) Nicolas Cage come in, and I've had the crackhead down the street," Ward said.

People ultimately will decide whether they'll stay and take part in the rebuilding of New Orleans based on their interests and that of their families.

Paul Dauphin, the general manager of a public relations firm, said he and his wife, Monica, will delay any decision about rebuilding or moving from their badly damaged house. "We're not going to make a long-term decision until December," Dauphin said. "Right now, this is too emotional."


(Crumbo reports for The (Columbia, S.C.) State. Hamilton reports for The Duluth (Minn.) News Tribune. Miriam Hill of The Philadelphia Inquirer and Kim McMahan of The Akron Beacon-Journal contributed to this report.)


(c) 2005, Knight Ridder/Tribune Information Services.

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