New Orleans, LA

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Gulf Coast Recovery Forging the New Frontier
Presented by Keith Hansen Hansen_keith_at_bah.com
New Orleans, LA March 23, 2006
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Table Of Contents

• Booz Allen Response Coordination Office
• Key Issues/Perspectives in Jan 2006
• Current State of Play
• Success in the New Frontier

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In response to Hurricane Katrina (and Rita), Booz
Allen established a response coordination office
with three focus areas

• People
• Ensuring the safety of our staff and
  re-establishing our impacted office
• Community
• Mobilizing the resources of the firm to assist
  those impacted
• Clients
• Improving our nations ability to prepare and
  respond through client service

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A series of interviews were conducted in January
2006 in order to evaluate the most appropriate
community assistance activities

• The interviews were designed to gather a broad
  understanding of issues critical to economic
  recovery from an inclusive cross section of
  business, governmental, non-profit and civic
  leaders. This cross section included leaders from

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The issues identified during these interviews can
be grouped into five main themes

• Levees and the uncertainty around reconstruction
• This was clearly the most significant issue
  identified by private industry in the New Orleans
  area as the risk they had the most difficultly
  incorporating into future planning
• The need for the region to speak with one voice
  and think beyond traditional local boundaries
• Present a consistent message to the local
  community and the general public
• Provide the opportunity for input from all, but
  also establish a framework to move forward
• The opportunity to resolve many of the past
  parochial barriers
• Changing demographics, commuting patterns and
  housing needs
• Significant changes to the infrastructure needs
  usages
• Short term vs. long term implications
• Workforce needs, skills community
  expectations
• The significant shift in supply vs. demand
  particularly in trade skills
• How to create a stable community which encourages
  the workforce to remain grow
• Access to Capital
• Short term bridge loans
• Mid - term stabilizing financing and Incentives
• Long term recovery financing and incentives

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Although the final resolution for the levees has
not been determined, progress has been made on
several fronts

• Levees and the uncertainty around reconstruction
• USACE indicates that the levees will be repaired
  to pre-Katrina levels by June 1, 2006 and full
  design levels by Sept. 2007
• Many of the design improvements (armoring, etc)
  focus on maintaining structural durability during
  storms rather than full category 5 protection
• Additional ultimate protection levels are being
  studied with an announcement planned later in
  2006

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There have been several efforts to synthesize the
many issues into a common framework with some
success

• Recent progress includes
• Urban Land Institute report was finalized
• Louisiana Recovery Authority draft proposal The
  Road Home Housing Program was developed
• Louisiana Speaks was formed
• CityWorks was formed
• Donald Powell became the focal point for federal,
  state local interaction
• Coastal Protection Restoration
  Authority/Regional Levee Authority referendum
• Other attempts have been less successful
• Healthcare collaboration

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The hurricane created a significant population
shift within the state of Louisiana

• The hardest hit parishes have seen population
  decreases of greater than 50 while others have
  seen increases of 30

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Given current trends and constraints, this
population shift is expected to be long term or
permanent
New Orleans Metro
Orleans Parish
Louisiana
Pre-Katrina Population Level
Source Katrina Index, The Brookings Institution
March 2, 2006
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The resulting population shift created both short
term issues and long term challenges
Average Daily Counts of Vehicles on I-10 Oaklawn
Overpass
Number of New Residential Housing Permits
Source Katrina Index, The Brookings Institution
March 2, 2006
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The hurricanes also created a significant shift
in the labor force and employment statistics
Breakdown of Labor by Employment and Unemployment
Jan 2005 to Jan 2006
Unemployment RateJan 2005 Jan 2006
of Labor Force
Labor Force
...A decreasing employment pool and unemployment
rate may pose significant challenges to employers
in the near term
Source Katrina Index, The Brookings Institution
March 2, 2006
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Although significant progress has been made,
rebuilding many of the community elements of
the New Orleans metro area is still on-going
Proportion of Open Public Schools in New Orleans
Metro(As of March 1st, 2006)
Proportion of Open Hotels in New Orleans
Metro(As of March 1st, 2006)
56
39
44
61
Proportion of Open Retail Food Establishments(As
of Feb, 2006)
Proportion of Open Public Libraries(As of Feb,
2006)
39
37
63
61
Source The Brookings Institute Katrina Index
Tracking Variables of Post Katrina
Reconstruction, 3/2/06
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Although significant progress has been made,
rebuilding many of the community elements of
the New Orleans metro area is still on-going
(Cont)
Proportion of Open Public Attractions(As of
December 1st, 2005)

• Percentage of College Students that have returned
  to New Orleans by College
• Dillard University 50
• Loyola University 81
• Tulane University 88
• Xavier University 76

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71
Source Katrina Index, The Brookings Institution
March 2, 2006
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Louisiana and the Federal Government have taken
several steps to create conditions for the
private sector to weather the storm and to build
confidence for future investment

• Gulf Opportunity Zone
• Tax Credits
• Bonus Depreciation with NOL Carryback
• Bonds for Business Investment or Improvement
• Emergency Bridge Loan Program (Interest Free)
• New Market Tax Credits
• Community Development Block Grant
• Loans
• Training
• Housing Reparations
• Future Economic Development Activities
• Holly Ridge Mega-Site

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In summary, the traumatic events in 2005 created
a fundamental shift in the business climate of
the region
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New Normal
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• New Frontier
• Low unemployment
• Risking workforce cost
• Many historical barriers to entrepreneurship
  removed
• Wide array of business incentives
• Massive financial inflows
• Housing challenges
• High uncertainty/limited predictability
• Tremendous amount of goodwill available

Normal
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• Old Frontier
• High unemployment
• Low cost workforce
• Slow/steady economic growth
• Geographic, legislative and tax barriers to
  innovation
• Available housing
• Targeted financial inflows
• Historical demographics

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Success in the new frontier will require a unique
set of capabilities and characteristics

• Ability to build non-traditional partnerships
• Ability to utilize innovative workforce and
  housing solutions
• Flexibility to adapt to rapidly changing
  conditions
• Ability to provide consistent delivery of
  results and return on investment
• Ability to leverage the significant tax and
  financing incentives to maximize benefits
• Acceptance and management of own risk profile

SUCCESS IN THE NEW FRONTIER
Genuine desire clear focus on helping the
region recover
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The innovation value chain model provides an
effective methodology for those pursuing
opportunities in the region