Bush's Gulf Coast Band-Aid

Experts cast a skeptical eye on the president's plan to jump-start reconstruction by creating a low-tax "Opportunity Zone."

Published September 18, 2005 12:56AM (EDT)

When President Bush spoke to the nation from the French Quarter on Thursday night, he decreed that New Orleans would come back: "There is no way to imagine America without New Orleans, and this great city will rise again." The president pledged to achieve that goal through "one of the largest reconstruction efforts the world has ever seen."

To jump-start the recovery, the president said the federal government will create a "Gulf Opportunity Zone," encompassing the region damaged by Hurricane Katrina in Louisiana, Mississippi and Alabama. Within the zone, small businesses, including minority-owned businesses, will get tax relief and be guaranteed loans, and companies that create jobs will be eligible for tax incentives.

All of which sounds promising and, to a number of distinguished experts on urban development, all too familiar. For decades, they point out, such incentives have achieved mixed results at best. To rebuild New Orleans and environs, they say, planners need to think beyond tax incentives and find new ways to integrate the city's poorest residents into the fabric of the area, transforming impoverished neighborhoods, without pricing low-income residents out of town.

"The federal government over the last 15 years has tried to use zones where they have tax relief to promote economic development. It hardly ever works," says Alexander von Hoffman, a senior fellow at the Joint Center for Housing Studies at Harvard University, citing failed experiments in New York, Chicago and Los Angeles. That said, he stresses that the tax incentives may help small businesses that were already established in the area get back on their feet.

"The evidence shows that enterprise zones can be mildly effective, but if there is something wrong with the location to begin with, they won't overcome that," says Elise Bright, Texas A&M professor and coordinator for the master's in urban planning program in the university's College of Architecture, and the author of "Reviving America's Forgotten Neighborhoods." "In this area, it may not be enough to overcome the reluctance to relocate in a place that hurricanes hit."

Nor should it, she adds. "I'm not sure it makes sense to offer tax relief to bring people back to an area that's very susceptible to environmental disaster." She suggests instead employing tax incentives to encourage rebuilding in the areas of the Gulf Coast that are less prone to inundation, lest the whole debacle of a hurricane and massive flooding be repeated in 20 or 30 years from now. "Otherwise," she says, "it's practically encouraging people to rebuild in an area that is likely to flood."

Others say that Bush's business zone plan is not enough to bring New Orleans back. "It's certainly positive that the president was saying that there has to be massive public investment as part of the deal to bring the city," says Paul Grogan, CEO of the Boston Foundation, and the author of "Comeback Cities: A Blueprint for Urban Neighborhood Revival." "But it shouldn't be a commitment to just bring the city back to where it was before. My hope is that there is a real commitment to deal with some of the terrible problems that New Orleans has in a very tangible way. A lot of those problems relate to the incredible isolation, segregation and walling-off of the African-American population from economic opportunity in New Orleans."

Grogan says that compared to cities like New York, Boston, Chicago and San Francisco, New Orleans has been "laggard" in reviving itself over the last 25 years, continuing to lose population and economic vitality. In contrast to areas like the South Bronx, which is still low-income but has experienced a return of housing and economic activity, New Orleans has been left behind. "This is the big opportunity to play catch-up."

With the federal commitment to rebuilding, the question remains what kind of city the new New Orleans will be. Already real estate fever has begun to spread in the city where the floodwater is still receding. Will the poor residents of the city's 9th Ward, who were displaced by the floodwater, come back, or will they instead be part of a permanent migration throughout the Southeast while the city is rebuilt for its wealthier residents, and as a tourist playground?

"The best way to ensure that those poor people are able to come back to those neighborhoods would be to rebuild with the kind of variety of housing types that were there originally," says von Hoffmann. And one way to achieve that is to limit the lot size that developers can build on and to keep shotgun shacks from being bulldozed and replaced by pricey ranch houses.

Grogan recommends mixed-income housing, so that the poor aren't warehoused in ramshackle slums. He says it's extremely important in getting the residents themselves involved in the early stages of the process. "I think that the lesson of urban revitalization is that ordinary people have incredibly good ideas about what their neighborhoods need, and what they'd like to see," he says.

Bright says that New Orleans should look to models like the South Bronx, Harlem and parts of Boston and Cleveland where middle- and upper-income people have moved into formerly poor areas without simply displacing the low-income residents, gentrifying them out.

"The government could require set-asides in new development that a certain percentage of the housing is reserved for low-income people," Bright says. "The problem is not that there are poor people. It's that we concentrate them, warehouse them in some part of town, and usually they're the parts of town that are most subject to disaster."

By Katharine Mieszkowski

Katharine Mieszkowski is a senior writer for Salon.

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