New Orleans Evictions Surging as Contractors, FEMA Bid Up Rents

New Orleans Evictions Surging as Contractors, FEMA Bid Up Rents

Nov. 15 (Bloomberg) -- Thomas Marr spent 11 months patrolling Baghdad in the gun turret of a Bradley Fighting Vehicle. He returned home to Kenner, Louisiana, just in time to face eviction from his mobile home park.

``I came home from one war zone to this,'' says Marr, 39, who plans to start over again in Austin, Texas, where his wife and two children sought refuge from Hurricane Katrina.

The permanent relocation of evacuees has already shrunk the local labor pool in the New Orleans area. Now, 2 1/2 months after Katrina hit on Aug. 29, a second exodus may be developing as many longtime residents are forced out by a housing squeeze that has caused rents to surge by as much as 100 percent.

Many landlords are seeking to reclaim and renovate units abandoned by tenants who fled the storm, which wiped out 200,000 houses in the metropolitan area, a third of the pre-Katrina total. Other owners are reaping a rent windfall from the shortage or clearing out trailer parks to lease land to the Federal Emergency Management Agency, which needs spots to temporarily house the displaced. Fueling the shortage is competition from thousands of people contracted by FEMA to come to New Orleans for recovery work.

``The economic repercussions are profound,'' says Bruce Katz, director of the Metropolitan Policy Program at the Washington-based Brookings Institution. ``The recovery is going to be slowed. Your workforce is not going to be reliable.''

10,000 Evictions

A moratorium that Louisiana Governor Kathleen Blanco imposed on evictions expired Oct. 25. The next day, constables in the New Orleans area were serving record numbers of notices telling tenants to leave. While renters get their day in court, most lose because state and local laws allow eviction without cause for those on month-to-month leases or if the landlord can claim the dwelling is destroyed, tenant advocates say.

``Early evidence suggests that 10,000 evictions will be filed in November,'' says Mark Moreau, co-executive director of Southeast Louisiana Legal Services, which represents tenants. That's a year's worth in the metropolitan area under normal circumstances, he says.

``The economy isn't going to work if lower-income people don't have access to housing,'' Moreau says.

New Orleans Mayor Ray Nagin has asked the city council and state legislature to consider limiting the amount landlords are allowed to raise their rents.

``The housing challenge, both temporary and long term, is the No. 1 issue,'' Nagin says. ``Pre-Katrina, you could rent a decent place for $400 or $500 a month. Now, some landlords are charging $1,000 or $1,500.''

Key to Recovery

If anything, the situation may get worse. A measure that passed the state House of Representatives on Nov. 9 would permit a landlord to evict tenants who left under mandatory evacuation and haven't made rent payments. The owner could dispose of anything deemed ruined after posting a notice on the door.

After complaints from tenant groups, amendments are under consideration for the Senate version that include requiring the landlord to document claims that possessions were ruined.

``It is essentially a landlord-immunity bill,'' says Stacy Seicshnaydre, an associate professor at Tulane Law School in New Orleans. A measure that would block rent-price gouging has been sitting in a legislative committee of the House since Nov. 6.

Loren Scott, president of Loren C. Scott & Associates, a Baton Rouge-based economic-consulting firm, predicted in late September the permanent relocation of 125,000 of the 1.3 million people who were living in the New Orleans area before Katrina. ``That number was way too low,'' Scott says now. He'll offer a new estimate this week.

FEMA Again

``Setting the limit on the quality and quantity of the recovery in New Orleans is the availability of housing,'' says Scott, former director of Louisiana State University's economic- forecasting division. The state Department of Labor estimates the area at least temporarily lost 237,200 jobs out of 615,600 as of mid-September.

FEMA, which took so much criticism over its handling of Katrina that Director Michael Brown resigned in September, is the focus of much of the local ire again. FEMA and other agencies have deployed about 5,500 federal employees in Louisiana and have contracted with thousands more to do everything from hauling debris to putting temporary roofs on homes.

``A company with a FEMA contract offered $2,000 a month to house 12 guys in my assistant's condo,'' says broker Andra Capaci. The 1,100-square-foot (102-square-meter) unit owned by Capaci's colleague in Kenner would have commanded $700 before the storm.

`So Many People'

Much of the housing rush is in Jefferson Parish, which encompasses the towns of Kenner and Metairie, both within 20 miles (32 kilometers) west of New Orleans.

Glenn Gardner's Metairie-based Prudential Gardner Realtors listed a 1,600-square-foot, three-bedroom house in Ormond at $1,100 a month. After a bidding war, it rented for $1,500, up from $800 previously. In Metairie, a duplex apartment fetched $1,800 a month, double the pre-Katrina amount, Gardner says.

``There are so many people in town who need places to live while doing temporary work -- insurance adjusters, contractors,'' he says. ``It definitely has put a squeeze on.''

Marr, the Bradley gunner, is losing both a place to live and his biggest asset, a mobile home in the Sharon Park trailer park in Kenner, where he says he just spent thousands of dollars to renovate. Park tenants received eviction notices Nov. 12, and are due in court Nov. 19.

``She wants that FEMA money,'' he says of landlady Jacqueline Whitsell. ``I thought FEMA was supposed to be helping people.''

`Lowest on Totem Pole'

Marr says Whitsell told Sharon Park residents she was going to clear the 50 mostly decrepit trailers off her land and rent the cleaned-up park to FEMA, which is leasing lots throughout the area to bring in trailers for displaced residents.

The Marrs doubt their trailer can withstand a move, even if they could find a place to take it. ``We're lowest on the totem pole,'' says Marr, an air-conditioning technician in civilian life who is still on active duty with the Louisiana National Guard.

Whitsell says she hasn't got a deal with FEMA, yet confirmed she plans to bulldoze anything left on her land, which she says is uninhabitable after Katrina. ``If FEMA comes along, God bless them,'' she says.

FEMA spokesman James McIntyre in Baton Rouge says his agency only contracts for space available at the time of a site visit. ``At no time will FEMA make someone homeless to house someone,'' he says.

No Intent to Evict

FEMA signed a contract with Wayne Breaux, owner of another Kenner trailer park, Airline Oaks, on Oct. 7 for a year lease for 77 mobile home pads and 13 travel trailer pads. Antoinette Landry and others interviewed at the park say they received notice on Oct. 10 that they had to leave by the end of the month. FEMA says that's not what the agency had in mind.

``We did not sign a contract with any intent of him evicting anyone,'' McIntyre says of Breaux. No FEMA trailers had been placed at the park, near the New Orleans airport, as of Nov. 8. Breaux didn't return phone calls seeking comment.

The current residents pay about $320 a month for their mobile home lots. FEMA agreed to pay $800 for each of 77 spots, according to Larry Orluskie, a spokesman for the Department of Homeland Security, which oversees FEMA.

More displacement may be on the way. As of Nov. 11, FEMA had already leased spaces for 6,763 travel trailers in the eight parishes of the New Orleans area, and the agency is negotiating leases or constructing sites for another 44,105, McIntyre says.

Katrina victims last week filed a class-action lawsuit against FEMA in U.S. District Court in eastern Louisiana, asking that the agency be forced to provide more housing assistance. They also want FEMA to stop evicting trailer park residents from their homes to make room for other displaced people.

`Scooped It Up'

The agency has also snapped up higher-end property.

After evacuating to Baton Rouge, C.J. Minor, co-owner of custom homebuilder C&G Construction in Kenner, says he stood in line for hours to rent a luxury condominium for himself at Southgate Towers near Louisiana State University. ``They broke all their rules to be as accommodating as possible,'' Minor, 53, says. ``And FEMA scooped it up.''

The day before Katrina hit, FEMA took all of developer R.W. Day & Associates' vacant units, including at Southgate, says Sandy Avery, director of development for the company. On Sept. 14, the agency signed a one-year, $1 million lease on the furnished apartments.

Even some outside contractors are priced out. Adam Luna brought five men from Brackettville, Texas, to install emergency roof tarpaulins under a FEMA contract held by the Baton Rouge- based engineering company Shaw Group Inc. Luna says he tried to rent a house for his crew. ``They wanted $1,200 for a two- bedroom house,'' he says. ``I can't afford that.''

Gardner and other brokers say they expect rents to come down as more housing is repaired and some workers leave. The question for New Orleans is how many residents will have moved away for good by the time that happens.

One ominous sign: Dave Nelson, owner of Just Ask Rental in Kenner, says only seven Penske do-it-yourself moving vans came in the first two weeks of November from people moving back to the area. Local customers rented 52 trucks -- about seven times the usual volume.

``These are one-way,'' Nelson says. ```Out of here and I'm gone.'''