With the immediate crises raised by Hurricane Katrina now past, attention is focusing on rebuilding New Orleans and Biloxi and Gulfport, Miss., and surrounding areas. That will surely mean disputes between landlords, tenants, insurers and the government over who should bear the brunt of the reconstruction cost.

The lone blessing for the region was that when Hurricane Rita blasted through parts of Texas and Louisiana less than a month after Katrina, the damage ended up being much less severe than many feared. Still, the question remains: Who is responsible for the $200 billion in damage and rebuilding costs in New Orleans and the much smaller amount for Rita?

Retail Traffic conducted a survey in mid-September to find what our readers thought about insurers', developers' and tenants responsibility following Katrina. About 70 percent of the 142 respondents say the damage to real estate owners and retailers should be handled by flood insurance and general liability or business owner insurance. A huge 82.4 percent expect clashes between landlords and tenants over who is responsible for what damage.

Surprisingly, many readers are not re-thinking their own insurance strategies. Only 26.8 percent of respondents have flood insurance and 48.6 have business interruption coverage. Just 30.3 percent said that they will change their insurance strategy as a result of Katrina.

For retail developers, Katrina was punishing. Some 13 malls in Louisiana and one in Mississippi were closed indefinitely. General Growth Properties' Oakwood Center in Gretna, La., sustained “major fire, smoke and water damage.” Riverwalk Marketplace suffered more damage from looting than flooding and was used as a staging center for emergency operations of the National Guard. Meanwhile, the largest mall in the Biloxi and Gulfport, Miss., area, the 900,000-square-foot Edgewater Mall, “took a severe beating from the storm surge and wind,” according to a spokesperson for Jim Wilson & Associates, which manages the property and has pledged to rebuild.

Which way forward?

But what will the new New Orleans look like?

The battle lines are being drawn.

According to Newsweek magazine, heads of New Orleans law firms, tourist businesses and other groups have been meeting with real estate developers to outline a vision of New Orleans as “an Afro-Caribbean Paris” — one that is more upscale and less populous, creating a higher demographic profile but less housing for lower-income families.

“It's like a forest after a fire,” says Doron Valero, president of North Miami Beach, Fla.-based Equity One Inc. “There will be devastation, but then the government is going to build it back and billions and billions of corporate dollars will flow into the city.”

Just over half — 56.3 percent — of the respondents to Retail Traffic's poll think New Orleans should be redeveloped; 23.2 percent say it doesn't make sense to build a city that is below sea level and the remainder don't have an opinion or would like to see the city sink back into the marshland much of it was built on. Only 44.4 percent say that if they had properties in New Orleans they would rebuild them, while 54.2 percent would replace structures in Biloxi and Gulfport. About two-thirds say rebuilding should be managed by public/private partnerships.

The Bush administration appears poised to grease the wheels for developers to rebuild the region. Bush has proposed to designate the entire area an economic empowerment zone — creating tax breaks and other incentives for developers willing to move back in. But there are questions as to whether such zones lead to genuine economic development or if they simply provide corporations with tax advantages.

Economic zones set in Los Angeles after the 1992 riots, for example, “did not have a noticeable effect on total private sector investment when compared to the region as a whole,” according to a research paper co-authored by James Spencer, a professor at the University of Hawaii-Manoa. Spencer is currently studying the specific impacts of the zones on retail.