Mississippi's Reversal of Fortune

In Casino Towns, Aid and Speculation Fuel a Post-Katrina Boom

BILOXI, Miss. -- On a recent Saturday night, traffic inching toward the 1,100-room Imperial Palace Hotel and Casino backed up for a mile on Interstate 110. Inside, gamblers jammed all 52 tables and 1,900 slot machines on the casino's three burgundy-carpeted floors.

Dickie Doucet, an IP executive host, smiled amid the electronic din of the casino floor, the $15-minimum blackjack tables and the whirl of cocktail waitresses in black skirts. Since reopening Dec. 22, the IP can scarcely find rooms to comp for guests, even on weeknights, he said.

"It's like New Year's Eve every night," Doucet bragged.

Six months after Hurricane Katrina smashed through a fragile necklace of Mississippi coastal towns, the region is enjoying a post-storm boom. Fueled by insurance money, federal reconstruction aid and speculative capital, surviving hotels and restaurants are filled to overflowing, beachfront land prices are soaring, and developers are placing billion-dollar bets that shattered antebellum mansions will give rise to condominium resorts.

The shared sense here is that Mississippi's recovery, while still in its early stages and reliant on continuing outside help, is moving much faster than Louisiana's. Blessed with less damage, more federal aid and greater political clout -- and know-how from past storms -- Mississippi's lightly populated coastline is emerging from chaos, while large parts of the metropolis next door remain a silent, rotting wasteland.

The guarded optimism is tempered by continued human suffering in one of the nation's poorest states, where 36,000 families remain housed in trailers and hundreds more live in plywood barracks and tents in the winter chill. To the west, the smaller towns of Waveland (population 7,100), Bay St. Louis (8,300) and Pass Christian (6,800) remain largely obliterated by Katrina.

"It's going to be a long journey -- we know that," said Pass Christian Mayor Billy McDonald, whose beach colony lost every business that generated sales taxes and 75 percent of its housing. Only about 2,000 residents remain. "First, we have to get cleaned up. Then we have to get people to come back. The hard part is in front of us."

But evidence of short-term recovery is everywhere in the cities President Bush visited this week. In Biloxi, a city of 50,000 that lost a quarter of its structures to Katrina, the three casinos that have reopened did $63 million of business in January -- close to the $83 million taken in by the city's nine gambling venues a year ago.

Harrah's Entertainment is building two new casinos at a cost of more than $1 billion. Landry's wants to build a Golden Nugget casino and boardwalk on part of 23 parcels it has bought, and MGM Mirage is pouring $1 billion into its Beau Rivage resort. The city has approved a $500 million Bacaran Bay casino complex.

Brent Warr, mayor of neighboring Gulfport (population 72,000), said the nation's discovery of the area's 26 miles of white-sand beaches has boosted land prices along the devastated shoreline by 50 percent -- between $1 million and $2 million an acre. Investors are also seizing on federal post-storm tax legislation, which lets companies immediately write off half the cost of new investments.

Sales tax revenue has surged 30 percent ahead of last year's total in Gulfport, the largest city on the Mississippi coast. Contractors in U.S. Army Corps of Engineers caps pack bars each night, and displaced families flock to home-improvement stores and auto dealerships on six-lane U.S. 49, the highway that leads north to Jackson. Doctors such as Philip Hage, 75, are coming out of semi-retirement to treat waiting rooms of patients flush with "FEMA cash."

"I'm jampacked now, as a matter of fact," said Hage, who hired a fifth assistant after the storm and plans to start rebuilding his 7,000-square-foot house, the largest on Gulfport's east beach before it was swept away by the waters.