In the ten years since Hurricane Katrina, East New Orleans has seen 83 percent of its residents return, but rumors following the storm has given the area a bad reputation among businesses. (Ashleigh Joplin/The Washington Post)

On one side of what’s left of the Grand Theater is graffiti, broken glass and boarded-up windows. On the other, there’s a massive mural that says: “We got work to do.”

Around the corner, dollar stores, fast-food joints and mostly empty strip malls have sprouted in the vast commercial lots cleared by Hurricane Katrina. There are no coffee shops, no full-service restaurants. A grocery store and the hospital only recently returned.

This is New Orleans East, once the “promised land” for the city’s black middle class. Ten years after the storm, its prosperous, professional residents have come back in large numbers, but their neighborhood has been forgotten, they say, left out of the city’s broader economic revival.

“We’ve been red-lined,” said Stella Jones, 72, a retired doctor who lives in an immaculately restored five-bedroom home. “They say the city is back, but we’re not part of the city.”

The failure of the East to return to its pre-storm standard of living has puzzled residents, especially given the billions of dollars in economic development and hurricane recovery funds that have rained down on the region. Unlike the poorer Lower Ninth Ward, where barely a third of residents have been able to return, the East has drawn back about 83 percent of residents. And while the East was heavily damaged by catastrophic flooding, so was ­Lakeview, a mostly white community whose bustling main street is now lined with restaurants, bars and coffee shops.

Residents blame the slow recovery on a variety of factors, including a controversial proposal under former mayor Ray Nagin (D) to forget about rebuilding parts of the East and the Lower Ninth and turn them instead into green space.

“That plan slowed down the momentum and created a specter of doubt around whether these neighborhoods would be rebuilt,” said Marc H. Morial, another former mayor who is now president of the National Urban League. “It also sent a signal to many of the retailers: Don’t come back.”

The sun sets on a parking lot where a mall once stood in New Orleans East. The shopping center was destroyed by Katrina and torn down after the storm. (Jabin Botsford/The Washington Post)

But the East’s failure to attract investment also highlights a broader disparity in post-Katrina New Orleans, where blacks have fallen steadily behind. In a report released this past week, the Urban League found that black unemployment in the city is double that of whites and the gap between black and white incomes has widened since the storm.

“There is a false impression that somehow New Orleans East is a neighborhood of criminals and thugs,” Morial said. People “don’t realize that New Orleans East is a neighborhood of homeowners.”

In the East, the streets are lined with single-family ranchers and massive two-story houses that harken back to a time when it served as an escape for white residents fleeing the city’s urban core.

“It was billed as the suburb within the city,” said Richard Campanella, a professor at Tulane University who studies residential settlement patterns in New Orleans.

Black families began arriving in the 1960s, settling first in neighborhoods designated for “colored people” and later in the historically white communities. Beverly Wright, 67, who lives a few doors from Jones, was 14 years old when her family moved to the East in 1962.

Jones said her father was a “Mississippi man” who believed in owning property. He worked two or three “side hustles,” day and night, to move his family up the economic ladder.

“When we moved there, I thought we were rich,” said Wright, a sociology professor at Dillard University. “We moved way out to where the buses didn’t go.”

Now, the buses do come out to the East, to serve a growing population of working-class and poor residents who moved here after the storm. They wait without benches at bus stops along roadways that were never designed for pedestrians or mass-transit commuters.

The influx of lower-income blacks has produced a more racially homogenous neighborhood (but for a small, vibrant population of Vietnamese residents) and one that is much less prosperous. The median household income in the East has dropped sharply from about $45,000 in 2000 to $35,000 in 2012. The number of families living in poverty, meanwhile, has shot up by a third.

Residents complain that they have to leave their community to meet many of their most basic needs. For nine years after the storm, there was no hospital. There are still no retail options and virtually none of the kinds of restaurants that have made New Orleans a destination for foodies.

“I thought I was living a good life. I was living in mediocrity,” said Critty Hymes-Blacknell, 65, who left the East for Texas two years ago. “You settle for mediocrity, and you don’t have to live like that.”

Hymes-Blacknell, an African American woman who was born and raised in New Orleans, had spent 28 years building a thriving obstetrics and gynecology practice of affluent patients in the East. After the storm, it was all gone.

“I recommended to anyone with illnesses not to come back to the East because it didn’t have a hospital,” she said.Concerns about the area’s deterioration transcend physical comfort. People worry that property values will fall, undercutting decades of effort to build up the black middle class, in large part by encouraging home ownership.

That mission was spearheaded by Liberty Bank, one of the first minority-owned banks in the South, which is based in New Orleans East. Beginning in the 1970s, the bank doled out small loans and later mortgages to working-class blacks who might not have qualified at other financial institutions in that era.

Before Katrina, when the East had lost many non-black residents and was rapidly losing its commercial sector, the bank worked to bring large chain restaurants to the neighborhood. Liberty’s president, Alden J. McDonald Jr., also invested personally in the Grand Theater. Neither project succeeded. The restaurants never came. And, after losing money, the Grand closed during Katrina and never reopened.In an interview, McDonald said he understands the business calculus that makes recruiting private investment to the community an uphill battle.

New Orleans East suffered a large amount of flooding due to Katrina, and while many people have moved back to the area, there has not been a priority to rebuild there. (Jabin Botsford/The Washington Post)

After the storm, “the problem . . . was the uncertainty as far as how many people would return,” McDonald said. But beyond Katrina, he said, there is probably a “lack of businesses who wanted to locate in an African American community.”

City Councilman James A. Gray, who represents the East, says local politicians have also squandered precious time and resources. Nagin, who was mayor during the storm, is serving time in federal prison on fraud and bribery charges, some related to disaster funds. And the East was represented for two years on the city council by Jon Johnson, who was convicted of defrauding the government of disaster relief money.

Still, Gray remains hopeful about the neighborhood’s economic prospects.People say all the time: “We have 83,000 mostly middle-class people out here. Why isn’t there a shopping center?” he said. But “they may not know what it takes to build a major shopping center and the time that it takes to put a deal like that together.”

Mardele Early opened Lake Forest Elementary Charter School in New Orleans East a year after Katrina, confident that a good school would attract residents to return to the area. (Jabin Botsford/The Washington Post)

And there are beacons of hope. As soon as she was able to return, Mardele Early, 61, and six former New Orleans public school teachers developed Lake Forest Elementary, a public charter school considered one of the best in New Orleans.

“In my heart, I knew if I started a school, people would come,” Early said.

In 2006, Lake Forest opened its doors in a building powered by generator because electric and telephone service still hadn’t been restored. Nine years later, the school educates 600 students, from jittery pre-kindergartners all the way up to restless eighth-graders.

On a recent morning, they all lined up in the gymnasium for Early’s daily pep talk. A few dozen parents looked on, including Kenyatta Ford-Theodore, 42, whose daughters are in first and sixth grade.

Ford-Theodore said she enrolled the girls in Lake Forest a few years ago when she realized the free public school offered a better education than the expensive private school she had been paying for elsewhere in New Orleans. Her family soon moved to the East, and she opened a Papa John’s franchise, one of several businesses working to revive the local strip mall.

“This is a good community,” Ford-Theodore said. “We just need people to believe in it.”