Gov't Incentives Encourage Business and Investors to Vacate New Orleans

Gustav and Ivan may another reason for businesses to continue to vacate the heart of New Orleans but history shows us that businesses, investors and individuals used government incentives as a reason to move out of New Orleans migrating to what is considered the North Shore and many left the state completely not finding the incentives meaningful enough to stay.

As a native of Louisiana for 29 years I have made five visits to New Orleans, two helicopter tours and looked at hundreds of real estate possibilities there with the intention of investing serious money in the market there. What I found was alarming! Most of the Go Zone money was being used to migrate families, businesses, jobs and investments out of the heart of New Orleans, to what is called the North Shore and even further north to what is referred as the I10/I12 corridor. While this has been good for the North Shore development and its investors it has failed those parts of NO that most needed the help.

Businesses, families, jobs and workers continue to move out of the heart of New Orleans. Ruth Chris and Oreck are just two examples of businesses that didn't just move from New Orleans but chose to leave the state. Freeport McMoRan maintains offices in the CBD, but moved their headquarters to Phoenix, Arizona.

Why have the government's efforts failed to keep businesses, investors and families in New Orleans? Because;
1) the Go Zone (H.R. 4440, THE GULF OPPORTUNITY ZONE ACT OF 2005 Incentive did not confine the building to those areas in New Orleans that were most in need of the stimulus. Investors and businesses were giving the same incentive to move out of the heart of the city as they were to stay in it. This gave businesses, individuals and investors incentives and motivation to migrate away from the riskier parts of the city! Is someone trying to kill off New Orleans or is the government completely incapable of thinking through the ramifications of their actions?

On each of my five visits there and all my studies I have been unable to make sense of investments, in the city (even with the generous incentives) due to the migration away from the city and the lack of economic engine and what appears to be an attempt to kill the city.

2) the Go Zone dollars went to those who could justify investing money in order to save future taxes. While they were very generous you had to have had income to benefit from them! The average guy in Louisiana doesn't have much income to shield so either the investment makes sense or it does not. Then he has to figure out how to get a loan. Even investors I know refuse to consider making investments in the heart of the city because it is hard to make financial sense of New Orleans even with the Go Zone incentives.
In 2005 The Donald Trump name was promoted heavily there and nationwide stating he was putting his name on a development there. The word on the street is that piece of property is being marketed for sale today, with no buyers in site. Why? In three words; no economic engine!
Why didn't someone ask the businesses, "what would it take to stay in the heart of the city?"
What will it take to move money, jobs, building and growth into the heart of the city of New Orleans?
a) Greater incentives than giving to those that took money north of the city.
b) Guarantee of income on those projects until the jobs come back. This will put local government on the hook to bring back jobs.
c) Free insurance against floods and hurricanes to protect investment made.

If New Orleans is to be rebuilt there must be a major overhaul with the think and the actions of the local government as well as how the tax incentives are used. Government will have to make some very strong decisions and be willing to offend some if this city is to truly be rebuilt. If the government and the people in power truly value the long-term survival of this city, it should retarget its incentives to bringing new families and new businesses into the heart of the city itself.

Grant Cardone is an author of Selling Is the Secret
Check out About Grant Cardone

Comments

[Aaror]

Maybe the idea is to rebuild the city on the north shore, uphill from the area that keeps flooding.
I know change is hard, but you should embrace the idea that NO will still exist, even if it shifts a few miles north, rather than rail against it moving. As the swamps that used to protect NO are eaten away, the current city location becomes less and less viable. I am sorry.

[nezumi]

With sea levels rising ever faster (temperatures seem to have reached a threshold where a body of ice cannot make it through the summer anymore - eating steadily away at the existing 'eternal' ice sheets right now) it is dubious that an insurance against flooding in NO will have any odds at all.
Unless great investments such as dutch-like flood engineering are undertaken the safe bet is against the city. And, given that white, rich, healthy and well-connected people are underrepresented, it is unlikely to come soon. What a pity it is indeed - to see this happen to one of the few actually living and thriving centers of American culture!

[Chavez08]

DISASTER CAPITALISM-YAAYYYYY!!!!
PILLAGE AND RUN-YAAYYYYY!!!!