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Galveston holds out hope despite Ike, economy

Good news has been in short supply since Hurricane Ike laid waste to much of this island beach town six months ago Friday.
Image: Beach at Galveston, Texas
Tourists from Missouri enjoy the surf and seagulls on the Galveston beach last month. Pat Sullivan / AP
/ Source: The Associated Press

Good news has been in short supply since Hurricane Ike laid waste to much of this island beach town six months ago Friday.

Neighborhoods remain desolate, dotted with looted, flood-damaged homes and apartments abandoned after Ike's 12-foot storm surge rumbled ashore on Sept. 13. The city, with an annual budget of about $80 million, suffered at least $1.4 billion in damage to its infrastructure.

Half the city's businesses — most based on tourism — remain closed. And nearly a quarter of Galveston's residents have left, taking desperately needed tax revenues with them.

Islanders rebuilt the city before, after a 1900 hurricane killed 6,000 residents in the deadliest disaster in U.S. history. But Galveston, once a major port city, was left a shell of its former self, with its mostly working-class population dependent on service jobs in the island's lifeblood industry, tourism.

'Not a good time to be recovering'
Despite six months of rebuilding, some wonder if it's even possible to restore the city to what it was before Ike, given the extensive damage, shrinking population and severe economic downturn.

"This is not a good time to be recovering from a disaster," said Robert Olshansky, a professor at the University of Illinois at Urbana-Champaign, who studies urban renewal after natural disasters.

The key to rebuilding after a disaster is to quickly get as much money as possible into public coffers, Olshansky said. But in a recession, the typical funding sources — the federal government and private investment — dry up, he said.

Since Ike blew in, Galveston's population has dropped from 58,000 to 45,000, the school district announced plans to lay off a couple hundred workers, and the student population has dropped by 25 percent, which will likely result in a $17 million loss in state funding.

But it's not all gloom and doom.

Crews are replenishing sand along a 51-block stretch of beach before spring break and the summer tourist season.

Galveston is heavily dependent on tourism, which in 2007 brought $808 million to the local economy and drew 5.4 million visitors. Tourism is responsible for 9,300 jobs, representing 30 percent of the city's work force.

Workers outnumber tourists
Construction workers still outnumber tourists along The Strand, Galveston's Victorian historic district in downtown, but shopkeepers say the progress that's been made gives them hope.

"I didn't think The Strand would be open for years. I'm amazed at how quickly things are back at some semblance of normal," said Keith Bassett, who lost two businesses and decided to reopen only one.

City manager Steve LeBlanc said Galveston has received $267 million in federal funding to rebuild housing and infrastructure and will be able to borrow up to another $40 million for operating expenses. The city has asked the state Legislature to allow it to keep $100 million in sales tax revenue it would normally turn over to the state.

More time needed to repair city
But it will take years to repair the city's housing, restore its financial health and infrastructure and create jobs.

"We keep fighting every day for Galveston. Everything we do we are fighting for Galveston's recovery, survival and betterment for the days ahead," LeBlanc said.

As neighborhoods hum with the sounds of reconstruction, some residents worry that restoring Galveston to its pre-Ike state isn't enough.

Tourism-based jobs are mostly in the service industry and are low wage, the city's poverty rate was almost twice the U.S. average, and its median household income was about a quarter less than the state average. From 1990 to 2007, Galveston lost 3.6 percent of its population while Texas' population increased by 43.2 percent, according to U.S. Census figures.

Galveston needs to diversify
Unless Galveston diversifies its economy — by expanding its port or offering more support for small businesses, for example — the city will continue its decline no matter what it does with its hurricane recovery efforts, said resident David Stanowski, who writes a blog on Galveston's economy.

"The problem I come back to is you have to have a prosperous economy to get people to move here and allows them to live so they can make a middle class income," he said.

Olshansky, the Illinois professor, said that while a natural disaster can allow a community to change, "it's unrealistic to think you can totally reinvent a place.

"Everybody wants to rebuild better than it was before. At the same time, everyone is deeply rooted in the previous reality," he said.

A committee of 300 residents is debating ideas for Galveston's long-term recovery, including adding a casino gaming district, offering tax breaks to new residents, and extending the island's seawall and adding flood gates to protect the city from the next major hurricane to roll through. The committee will present its recommendations to the city council next month.

Betty Massey, the committee chairwoman, said its mere existence gives residents hope, "that there is that proverbial light at the end of the tunnel, that we are taking control of our own future and taking steps to get there."

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