Jazzed over New Orleans

Wednesday, Feb. 15, 2006 | 12:33 p.m.

Harrah's Entertainment isn't waiting for the federal government to rebuild New Orleans' damaged levee system before it reopens its casino near the city's historic French Quarter on Friday - the day before the start of a scaled-down Mardi Gras celebration.

Nor is Las Vegas-based Harrah's, the world's largest casino company, relying entirely on Louisiana to oversee the bigger-picture redevelopment effort in New Orleans and the Gulf Coast.

Not long after Harrah's assessed the damage to its hurricane-ravaged casinos along the gulf, Chief Executive Gary Loveman was on the phone to chief executives of other major companies with operations affected by the storm.

A few weeks later, an informal group named the Business Recovery Council was born.

Criticism of the government's slow response to the hurricane disaster that claimed about 1,000 lives last year has been strident and widespread. But Loveman said the business group wasn't created to cast stones or replace government's central role in the rebuilding effort.

"There are things the government has to do and things that are clearly the role of business," Loveman said from New Orleans in an interview earlier this week. "Then there are things in the middle where (businesses) can work with government."

In other words, the idea is to assist government in its daunting and unprecedented rebuilding effort in the Gulf Coast region.

The Business Recovery Council, which has no charter or organizational structure, met Feb. 13 after previous discussions by telephone. Harrah's has declined to name the other companies involved in the group, which include leaders of transportation, power, oil and aerospace giants, among others.

Some participants include members of the Louisiana Recovery Authority, a public-private group created by Louisiana Gov. Kathleen Blanco to assist in the recovery effort and the Bring New Orleans Back Committee, a similar group created by New Orleans Mayor Ray Nagin.

The group's immediate focus will be lobbying for affordable housing, which will be needed for workers who are now living in trailers and other makeshift accommodations, Loveman said. Another central concern is a lack of qualified building and housing inspectors, he said.

Future assistance efforts may focus on issues such as health care and schooling, Loveman said.

Harrah's has spent about $15 million to rebuild its casino and has hired about 1,250 employees to open the property - well short of the roughly 3,000 people who worked there prior to the storm.

"I do think it will become an important tourist destination," Loveman said of New Orleans. "We have a big bet down here but I think it will come back well."

That will take time, Loveman said. Yet with the only land-based casino in the gulf region and a marquee property in New Orleans, Harrah's has something of an advantage.

Nearby gambling boats among the first to reopen - Pinnacle Entertainment's Boomtown New Orleans and Boyd Gaming Corp.'s Treasure Chest - have been doing a ton of business. Boyd, which recently reported fourth-quarter earnings, said the Treasure Chest benefited from a relative lack of competition while other casinos remain closed. It also saw new customers such as construction crews.

In December, Boomtown's gambling revenue rose a whopping 144 percent over a year ago, while Treasure Chest rose 72 percent. November figures were equally impressive.

But New Orleans still isn't a sure bet.

Loveman still expressed concern about the way the disaster relief and recovery effort has been handled in Washington so far.

"It has taken far too long," he said. "The president's attention has been distracted with issues not nearly as important."

At Monday's Business Recovery Council meeting, industry leaders also voiced frustration about the most critical element of the recovery effort: levee repair.

The Louisiana Legislature, now in a special session, has until today to vote on a bill aimed at streamlining the process of overseeing the levee rebuilding effort. Oversight now rests with several local levee boards. With billions of federal dollars earmarked toward the project, the state is interested in creating a single body that would disburse the money. So far, discussion at the Legislature has broken down into squabbling and political infighting.

While Harrah's moves ahead, other major businesses at the meeting expressed reservations about reinvesting in the gulf while the levee repair process remains unresolved.

"There needs to be some movement at the state Legislature," Marybel Batjer, vice president of public policy for Harrah's, said. "Without assurance that the levees will be fixed, major companies will have a concern that their investments will not be secure. It really is a prerequisite to everything else."

Along with lobbying efforts, another potential goal for the group will be to assist government in analyzing the multitude of rebuilding plans that have emerged from consultants and other experts, Batjer said.

Batjer, hired more than a year ago after Harrah's announced its historic buyout of Caesars Entertainment, comes with some impressive political credentials and has been part of the company's expansion into a global enterprise. She previously served with California Gov. Arnold Schwarzenegger and before that was chief of staff for Gov. Kenny Guinn.

For Harrah's New Orleans employees, the reopening marks some return to normalcy.

Most of the workers hired had worked at the property before Hurricane Katrina blew through. Most of the rehired workers were displaced by the storm and have been living with friends and relatives in places such as Baton Rouge, La., and Houston, Loveman said.

In some cases, people are living nearby in trailers, provided by the Federal Emergency Management Agency. The trailers are sitting in front yards because homes are uninhabitable.

"There's a tremendous number of FEMA trailers," Loveman said. "It seems like every trailer or RV in the world is down here."

Harrah's New Orleans sustained some damage that was relatively minor compared to the near-complete destruction of most riverboat casinos in the region.

The reopening of the property has proceeded on schedule ever since the company was able to assess the damage and commit to rebuild, Loveman said.

"We're about where we anticipated we'd be once the dust had cleared," he said.

New Orleans remains a changed city, where many businesses remain closed, lots of traffic lights are out and basic infrastructure is in repair mode.

There are some bright spots on the horizon, Loveman said.

The Tulane Medical Center plans to open today, adding much-needed health care to the region. New Orleans will host its first major convention next month and the shipping industry - including cruises for tourists - is starting back up again, he said.

For many casino insiders, the hurricane disaster response in Mississippi and Louisiana has been a study in contrasts.

Within weeks of the storm, the Mississippi Legislature met and approved a plan, championed by the Gov. Haley Barbour, to bring casinos ashore at the same tax rate of 8 percent. Several casinos have since reopened, while nearly a dozen plan to open over the next 12 months.

Unlike Mississippi's governor, Blanco is no friend to the casino industry and dislikes the concept of a gambling-based economy.

Louisiana taxes casinos at around 22 percent and has so far allowed only one land-based casino. The Harrah's property has survived two bankruptcies and is now profitable in part because of concessions by government, including lowered payments to the state and the right to operate on-site restaurants.

Harrah's is now spending $150 million to build a 450-room hotel and conference center, expected to open later this year.

"Louisiana is undergoing a moment of revision and hopefully reconstruction, and by Friday, we will know what the shape of things will be," said Wade Duty, executive director of the Louisiana Casino Association.

Liz Benston can be reached at 259-4077 or at benston@lasvegassun.com.