Tony Stasiek, editor
As published in Scotsman Guide's Commercial Edition, August 2008.
This summer's flooding in the Midwest has reawakened memories of -- and curiosity surrounding -- hurricanes Katrina and Rita and their havoc on the Southeast.
Three years ago this month, New Orleans saw its levees collapse, its International Canal spill and its Ninth Ward inundated and inundated again. A year later, less than half of New Orleans Parish's population remained, with commercial and residential borrowers stung by the cost of drying out. As a similar fate toyed with Des Moines, Iowa, this past June, the question for mortgage professionals became one of preparation for disaster-based risks and how to handle them when they occur -- even in Iowa.
First the good news: The Greater New Orleans Community Data Center reports that the New Orleans area reached 87 percent of its pre-Katrina population as of March, based on the parish population receiving mail. By the end of August, the city also will have hosted the 2008 NBA All-Star Game, this month's National Association of Mortgage Brokers regional conference and a slew of other attention-getting events that can sway business-owners' sentiment.
Then there are the business-owners who leave. Since 2005, tens of thousands of Louisianans fled the Big Easy for Baton Rouge, La. -- creating an environment ripe for development and construction loans. Lots of them. In fact, potentially too many: As Darrick Meneken writes in this month's Spotlight, Baton Rouge has iced down its swelling to reveal a particularly jagged multifamily market.
Although Iowa cities such as Cedar Rapids and Des Moines are unlikely to experience similar population fluctuation, their post-flood scenarios could pose issues for their commercial real estate markets. There's the issue of securing funding for property on a known flood plain. And already-affected properties face a risk of indoor-groundwater contamination -- especially if floodwaters dragged in fertilizer and herbicides in farming communities. Zurich North America's Debra Hausser explores this kind of risk scenario in this month's Lead Article.
tony@scotsmanguide.com
