STATE OF THE CITY ’09: “Let’s get on with it”

Here is the prepared text of Mayor A.J. Holloway’s State of the City address, delivered Monday, Jan. 26, 2009 during a luncheon sponsored by the Biloxi Bay Chamber of Commerce at the Beau Rivage Resort & Casino.

To see online video of the speech, click here.

I am delighted to be here today to provide you with a report on the state of our city. Today, I will review the progress we have made and are continuing to make.

I will advise you of the challenges we face, and tell you what we’re doing to overcome those challenges and move forward.

The state of our city remains strong, hopeful and encouraging.

We are continuing to make progress each and every day of this recovery. Large or small, something good happens everyday.

Let me outline a few examples.

Our Community Development Department has issued an average of $4 million in residential and commercial construction permits in an average week over the past five years.

This trend continued in the past 12 months. More than a quarter-billion dollars in permits. Nearly $170 million worth was in commercial construction, and more than $52 million worth was in residential development.

Keesler Air Force Base has made significant progress in its $512 million initiative to construct 1,067 new housing units for Keesler families.

To date, more than 400 families have moved into new base housing. More than 65 percent of the work has been completed, and all will be completed in the first quarter of next year.

The Biloxi Housing Authority, meantime, is continuing its work to provide affordable housing for residents. To give you an idea of how far the Biloxi Housing Authority has come, the day before Katrina they had 474 units. The day after Katrina they had only 202 inhabitable units.

Today, the Hope VI rentals are all occupied.

The housing authority has 686 occupied units overall, with an additional 162 units coming on line by March 31, 2009. By the end of 2009, between tax credit properties and Section VIII housing, the authority will be assisting 1,600 families.

The Biloxi Housing Authority has been meeting the challenge, and I congratulate the board of commissioners and the administration.

This progress in the restoration of housing will have a dramatic impact on Biloxi Public Schools, where enrollment is still 20 percent off its pre-Katrina level of 6,100 students.

I should also note that the school system had another banner year. Biloxi was one of only nine districts in the state where every school in the district either met or exceeded federal benchmarks for progress.

The school system right now is in the midst of a $15 million capital project program that includes the opening of a new wing at the high school to accommodate the move of the ninth grade from the junior high.

This move will offer more educational opportunities for our ninth graders. We will move our sixth graders to the junior high. We will open the door for pre-K in Biloxi schools.

The city has spent more than $18 million in the past year on moving major rebuilding efforts forward. You can see progress at the Biloxi Small Craft Harbor, the work underway at Point Cadet Marina, and the restoration of the Biloxi Community Center and our two fire stations in east Biloxi.

You can see some of the dozen or so restaurants we lost on front beach returning, along with service stations and, yes, homes. We’ve issued permits for three new hotels, $22.7 million in construction, and more than 300 new rooms on the beachfront.

You can see new landmarks like the Biloxi Yacht Club or our Katrina sculptures that have become so popular with visitors and locals. You see new banks, new churches, and new apartment complexes. In fact, in the past 12 months, we issued permits for three new apartment complexes, accounting for 340 new apartments and more than $20 million in construction.

You know, it took 30 years for our waterfront and our economy to recover from Hurricane Camille. Today, some might argue that it feels like it’s been 30 years since Katrina.

And despite the downturn in the national economy, we’re holding our own as far as gaming and sales tax revenue are concerned.

Our expenses, however, have gone up considerably.

Before gaming, we had an annual budget of about $30 million. In the year before I became mayor we had one capital project. We built the O’Hanlon Gym on Point Cadet. It was about $350,000 and it was all federal money.

In a typical year before the storm, we’d be looking at a municipal budget of about $120 million, which included anywhere from $20 to $40 million in locally funded capital projects.

Our budget this year is $622 million, with $495 million in capital projects. And yes, the vast majority of it is federal money.

There’s a lot of uncertainty about the economy on global and national levels.

We certainly share that concern, but at the same time our program of public works will put us in a good position to seize the opportunity when the national economy does turn the corner.

We’ll have new roads, new streets and drainage, new facilities, and, yes, we’ll have more residents. We are not building for the future. We’re rebuilding for a bright and promising future.

Some people will tell you that one of the good things about A.J. Holloway is that he’s conservative and he will tell you the truth – whether it’s good news or bad news.

Other people will tell you that one of the bad things about A.J. Holloway is that he’s conservative and he will tell you the truth – whether it’s good news or bad news.

Today, I am here to tell you that for all of the encouraging signs that we see throughout our city, I am far from satisfied at where we are in our rebuilding. Frankly, we are not as far along as I would like for us to be at this point.

Last year at this time, I told you that we had architects and engineers working on plans for as many as 10 city facilities. Today, we have architects and engineers working on plans for 58 city facilities and assets that will account for $411 million in new construction.

The problem is, I want to see some of these facilities coming out of the ground, and I don’t think I’m alone in that feeling. We need to get on with it.

Let me give you some background in to how we got where we are today.

Because Biloxi is on a peninsula with most of the eastern end of our city in a flood zone, we made some prudent decisions on how we were going to rebuild.

To avoid the threat of future storms and to take advantage of the economies of scale, new facilities will have multiple uses and will not be built in the new flood zones. That means that you won’t see things like the O’Hanlon Gym or the Herbert Mullin Seniors Center rebuilt on Point Cadet. Tullis Manor won’t be back, and our library won’t be as vulnerable anymore. We also won’t be putting an historic structure on the Town Green.

Instead, we’re pooling insurance proceeds from those buildings – and others – to build multi-use facilities like a new Visitors Center north of the Biloxi Lighthouse.

We’ll have a library that will be part of a library and cultural center on Howard Avenue, north of the current Community Center, which will be used for senior citizens programs and activities.

These facilities will meet the new federal flood elevations. They will blend in with the architectural integrity and character of old Biloxi, and have all of today’s modern conveniences and efficiencies.

Now, where the challenge comes in is to make sure that the total amount of money from the destroyed buildings is enough to fund the new multi-million dollar facilities.

We’re using insurance proceeds, grants from the Mississippi Development Authority and money from FEMA.

As part of its process, FEMA estimates the cost of lost buildings and then uses a formula to estimate cost of construction. Typically what has occurred on major projects is that once we advertise the project and get a good field of bids from contractors, the lowest bid is sometimes two or three times higher than the FEMA estimate.

Who’s going to cover that gap, which could be in the millions of dollars on each project we do? FEMA has assured us that they would cover any “reasonable” difference.

A good example was the Biloxi Community Center. FEMA’s original estimate was less than a million dollars. The cost of restoration and bringing this 1968 building and site into ADA compliance was $3.2 million.

The first major test case on new construction will be the new Visitors Center, which goes out for bid in the next few weeks. This will be FEMA’s opportunity to be fair and reasonable.

Now, let me say something that I’ve said many times: FEMA has been very good to this city. I’m afraid to think of where we would be were it not for FEMA. But the fact is that we have to remember that that this city, this state and this nation have never encountered anything like Katrina.

No one has ever undertaken a rebuilding effort on the scale of the one we’re involved in. That fact alone says a great deal about our continuing challenges, but you should also remember that we’re undertaking all of this work in an accountable fashion.

We’re making sure to do it right.

We owe that to taxpayers across the country who have sent billions of dollars our way, and we owe that to the tens of thousands of volunteers who have helped in our recovery. God bless them all.

Having said all of that, let me give you an idea of where we are on some of our projects.

Design work is completed on five major historic restoration projects – the Biloxi Lighthouse, the Biloxi Fire Museum, the Magnolia Hotel, the Swetman House and the Old Brick House. We are awaiting approval from FEMA and MEMA before we can go out for bid on those projects. Those five projects alone amount to more than $2 million in construction, and I suspect they will be more than that when all is said and done.

I want restoration work at the Biloxi Small Craft Harbor and Point Cadet Marina to be completed this summer. Right now, we are awaiting FEMA and MEMA approval for specifications for the south wall at the Biloxi Small Craft Harbor and restoration of the Commercial Harbor before we can put those projects out for final bids.

Other projects that are expected to be completed this year include the fishing piers at the Coast Coliseum and Biloxi Lighthouse. I also expect us to complete repairs to the Lighthouse Fishing Dock at the north end of Lee Street.

Right now, design work is underway on all of those projects, as well as for City Hall, the new library and cultural center, the White House fountain, the new Public Works administration building, the two fishing bridges.

So what am I doing about speeding these projects up? I met with all of the engineers and architects we have working on various city projects. We met at City Hall, but some of them probably felt like we were going to meet in the proverbial woodshed.

The fact is, and I communicated this fact to them, I want these projects coming out of the ground, and I want to see them started this year.

I realize everybody’s busy, but let’s get on with it.

Something that you’ll also be seeing this year is the beginnings of our massive infrastructure work, a $355 million plus project that will see us rebuilding or repairing more than 100 miles of city streets, storm drains, sidewalks, curbs, gutters, water wells and lift stations. Essentially, if it went underwater we’re replacing or repairing it in this FEMA-funded project.

Months ago, we received qualifications from dozens of engineers from across the Southeast, and today we have the best of the best from that group ready to begin the design work on this project.

A project of this size and scope – like so many things – is an unprecedented undertaking for this city. In a typical year, we’d do about $16 million in capital projects, so at that rate we’d looking at 20 years worth of work. But we’re looking to condense it into five to seven years.

The city continues to make progress on providing water and sewer in Woolmarket. In March, an annexation trial will begin regarding the area around the new Highway 67 corridor. As I’ve said so many times in the past, Biloxi must protect its natural path of growth.

Meanwhile, our city workforce continues to meet its responsibility of providing the day-to day services that you expect and deserve. Today, we have 757 city employees. We are 92 percent staffed. In our Police Department, we have 133 uniformed officers and are 90 percent staffed there.

The Public Works Department’s in-house construction team has completed nearly two dozen streets and drainage improvements and is coordinating more than 70 major projects. More than half of those 70 projects are storm related.

In one way or another, the Public Works Department has a hand in every piece of construction in this city – public or private – and the department does this while maintaining miles and miles of city streets, drainage systems, water wells and utilities.

The Biloxi Police and Fire departments continue to reach new levels of professionalism and public service.

Last year, we had only three traffic fatalities on our city streets. That’s a 10-year low, and I credit that achievement to the presence of our police department and the enforcement job that these dedicated men and women do.

When big things happen in our neighboring cities, they usually call the Biloxi Police Department to help out. We have that training, that equipment and that professionalism working for us each and every day.

Same with our firefighters, who do much, much more than fight fires. Chances are, when you call 911 with any kind of emergency, the Biloxi Fire Department is the first responder, probably in one of the four new fire trucks we purchased in 2008. Last year, our firefighters responded to a record 4,346 emergency medical calls, a 13 percent increase over 2007. Seven out of every 10 calls is an emergency medical call.

During the year, they successfully completed more than 35,000 hours of training, learning new techniques to help save lives. Our Fire Department also conducted almost 4,500 inspections in the past 12 months.

Our Community Development, which oversees planning, zoning and land use, and ensures all construction work meets international building codes, also had a busy year. The department issued more than 3,300 building permits in 2008.

Our staff issued nearly 1,800 business license renewals and processed applications for more than 200 new businesses during the year. I realize that everyone’s flood insurance premiums have increased since Katrina, but our work in flood plain management has helped reduce your premiums by 15 percent over the past several years. Last year alone, we saved Biloxi’s 7,000 flood policy holders more than $485,000. And we’re looking to save you another 5 percent in the coming year.

Our federal programs division worked with Back Bay Mission to invest more than $100,000 to restore storm-damaged homes last year, and shortly before the year ended we added another $200,000 to build on the success of that program.

Federal money is also funding the $2.8 million rebuilding of Howard Avenue in east Biloxi.

In our Parks and Recreation, I am relieved to report to you that we have paved the parking lot at the Biloxi Sports Complex. I appreciate your patience on this.

We completed repairs at the Biloxi Natatorium, and we also opened a new facility to serve east Biloxi, the Mercy Cross Recreation Center. I want to thank the Catholic Diocese of Biloxi for helping make the Mercy Cross center happen. Our free recreation programs continue to offer a significant savings to Biloxi families.

Over the years, we’ve conditioned our Biloxi residents to expect an enhanced level of city services at a modest if not downright low cost. You see it in the free recreation programs, a city property tax rate that has gone only in one direction – down – in the past 16 years, and the lowest school taxes you’ll find anywhere.

As mayor, I’m proud that we can offer you such a good return. But the fact is, we have to be realistic.

Everybody on the planet is laying off or cutting pay, and here in Biloxi we’ve been handing out huge increases in pay and benefits. I made my feelings known at budget time when there was a proposal to almost triple the amount of longevity pay we give our employees.

As a result of that increase, along with back-to-back pay raises of $1,500 and $4,600 per employee, we have added $7 million in annual spending to the city payroll, on top of totally paying health insurance for each of our employees AND their families.

The cost of our city employee compensation package – that’s pay, insurance, retirement and other benefits — was $35.6 million for 2006. For 2008, those costs totaled $44.5 million. That’s a 25 percent increase in just two years.

The budget for employee compensation for 2009 is $50 million, which is 53 percent of our annual operating budget, and it’s scheduled to be even higher in 2010, when the full impact of those longevity increases goes into effect.

Our annual operating expenses now consume all of our annual revenues. So what am I doing about it? We have a hiring freeze on in the city of Biloxi. We must continue to monitor costs of manpower and resources. We must continue to find ways to not just work harder but smarter. I have warned in the past that the pay and benefits that have been put in place are going to lead to layoffs or tax increases.

Another area that we’re looking at is the fees that you pay for water and sewer service and garbage collection.

Right now, we have the lowest water and sewer fees in South Mississippi and among the lowest in the entire state. That’s fine and good, except that our water department today has a deficit of $4 million. Over the past several years, even before the storm, we have been propping up the water department with money from other sources, such as gaming or property taxes.

We should not be doing this to the extent that we are doing.

Same with the garbage fee you pay. Right now, the city of Biloxi charges $5 a month per household to pick up your garbage. We pay almost three times that amount to provide that service. We cannot continue in that fashion. It’s not fiscally responsible.

I’ve said this more than once to my fellow elected leaders.

We need to close that gap and I propose that we re-align these fees over two or three years to bring them more in line with the costs of these services.

Before the storm, Mississippi Power Co. had individual power meters at each of the slips in our harbors and marinas. Owners of the boats paid the power company directly each month.

After the storm, Mississippi Power said they were not going to replace those meters, and they would have only ONE meter at each harbor and marina and only one bill, to the City of Biloxi.

That means that the city is now paying the electric bill for all of the boats in our harbors and marinas. And I remind you that some people LIVE on those boats.

I’ve asked again and again for approval to adjust the slip fees to compensate for free electricity, but I’ve been unable to convince the City Council to approve this.

I will keep trying.

You see, what we need and what we should have in our water department and in our port division is an effective cost-recovery system. These departments should operate on a break-even basis. You align fees with expenses.

When you take all of these things into account – the increases in our compensation, the failure to have even minimal increases in fees – it takes a toll on our revenue. A million dollars here and a million dollars there, and pretty soon you’re talking about some money.

You should understand that every level of government in the country is facing these type challenges. Biloxi is not alone in that regard, but the difference is that we have been so blessed in the past.

However, we no longer live in the day when this city can pay cash for new facilities or major streets and drainage improvements. I would like to think we’ll be there again, but right now we’re in the real world and we need real-world solutions and management.

I plan on again introducing measures that will bring the water and sewer and garbage fees more in line.

It’s nice to have the lowest price, but it’s more important to have the fairest. I realize that we’re in an election year, and this is going to take some political backbone, but it’s time to get on with it. We must do the fair thing to all of our residents.

There you have it, my fellow Biloxians. The truth as is I see it.

Biloxi is a city that has seen its fair share of challenges over the years, whether they be natural disasters like hurricanes or a poor seafood season or man-made ones, like the financial crisis or a sputtering economy.

We’ve come through every one of them, just like we’ll come through this.

We will not merely endure, we will prevail.

Some of you may have heard me say that line in the days since Katrina.

It was inscribed on the library when I attended Ole Miss. It’s from William Faulkner’s speech where he accepted the Nobel Prize.

I think the entire context of what Faulkner said is appropriate today.

He said, “I believe that man will not merely endure. He will prevail. He is immortal, not because he alone among creatures has an inexhaustible voice, but because he has a soul, a spirit capable of compassion and sacrifice and endurance.”

For years, some people had the mistaken belief that we were flush with cash, and that we were one of the richest cities in the country.

You might remember what I always said: We were healthy, not wealthy.

Today, we are still the same people we were before the storm. With a soul. With a spirit capable of compassion. And sacrifice. And endurance.

Times were indeed great in the past. And they will be again.

We are still healthy, not wealthy. The situation is far from bleak. The outlook is full of promise and opportunity.

We have to be diligent in our efforts. We have to be prudent and cost conscious. We have to be motivated. We have to be patient. We have to have faith. And most of all, we have to get on with it.

God bless you and God bless Biloxi.