August 29, 2006  - from the Hattiesburg American

By Reuben Mees

American Staff Writer

rmees@hattiesburgamerican.com

When Jackie Terry answers the phone at Body Tech Inc., formerly Michael's Wrecker Service, he has to tell customers an ugly truth.

"Since Katrina, I've stopped a lot of stuff and went back to what I know 100 percent – that's paint and body work," he told a caller who was asking about salvage parts.

When Hurricane Katrina ripped through the Pine Belt a year ago, it demolished Terry's main building that contained his offices and body shop as well as hundreds of thousands of dollars of equipment inside.

Before the hurricane, Terry had a thriving salvage yard in addition to his wrecker service and paint and body shop. But when the storm blew away his building, he lost about $3 million in assets and has had a difficult time bouncing back.

"It's been very, very slow, and I ain't got help from nobody," Terry said. "I take that back. I got a couple of cases of bottled water, but that's all I got."

While many business have taken advantage of tax incentives, low-interest loans and other benefits for building in the federally declared disaster area, Terry said little was done to help small businesses.

"I honestly thought the government would help a little bit," he said. "But they keep telling me I don't qualify."

So Terry was forced to cut his number of employees from 28 to nine, rename his business from Michael's Wrecker Service to Body Tech Inc. and begin offering custom paint and body products.

"I'm just now getting a grip on it, but hopefully by the first of the year, my business will be Katrina-free," he said.

Nothing normal

While other businesses were not as hard hit as Terry's, the road back to normalcy has been long and difficult.

Such was the case for Sacks Outdoors and N&H Electronic Distributing, two businesses that were formerly located about a mile apart but became neighbors after the storm.

"We've shared the building since the beginning, but at least he (N&H owner Ricky Gibson) has air conditioning," Teresa Sackler, who owns Sacks with her husband, David, joked of the 601 Broadway Drive building the two companies have shared since Katrina.

Both Sackler and Gibson, said they found themselves scrambling in the days after the hurricane to find the most suitable place to set up shop while their heavily damaged buildings were being repaired.

While the Sacklers finally are preparing to move back into their building in downtown Hattiesburg, Gibson said his building at 1100 Hardy St. probably won't be ready until near the end of this year.

"It's been a slow process because we had to decide on who to build it and then we had to rearrange some things with our plans," Gibson said. "Then factor in that contractors are having a hard time getting labor on a consistent basis to work on the building."

Sackler said lack of available labor in the construction industry caused delays and the financial aspect of the rebuilding process has been a major obstacle.

Higher than expected labor and material costs eventually drove the cost of their project from the $400,000 they had anticipated to more than $500,000, Sackler said.

First time without leaks

"I thought that ($400,000) was more than enough to do what needed done. We all did – insurance, contractors," she said. "You can't build an old building for that price, but you ought to be able to repair it for that price."

But Sackler said everyone is pleased with their new building and ready to get into the air conditioning before the end of the summer.

"They've done a great job," she said. "Now we have a water-tight, well-insulated building with beautiful stucco and a new roof. I believe this is the first time we will have a building that doesn't leak."

While Katrina was a major downer for some business owners, it was a boon for other businesses and outside companies that had been keeping a close eye on the potential of the Hattiesburg market.

"This is unequivocally the busiest year – an unprecedented boom in the commercial industry," said commercial real estate agent Andy Stetelman.

He attributes much of the growth in the retail and service sector to a federally legislated tax package called the Gulf Opportunity Zone Act, or the GO Zone. That act allows both large and small companies investing in the disaster area to receive significant tax exemptions and credits.

"We have probably absorbed 3 million square feet of retail space since Katrina," Stetelman estimated. "Any retail space that is priced right and nothing is wrong doesn't stay on the market for more than 45 days."

The real estate agent said he expects the boom in the Pine Belt's commercial sector to continue long after the 2007 deadline for GO Zone projects.

"There are a lot of companies that wanted to get their projects done by the end of 2007, but they weren't able to get everything in place," he said. "I think we'll see those people continue to show an interest in Hattiesburg."

At a glance

Here are some of the provisions of the Gulf Opportunity Zone Act legislation that have made business investment in the state more enticing.

Tax incentives

*Bonus depreciation of both real and personal property at an additional 50 percent

*Increased expensing of purchases of up to $200,000

*Demolition and cleanup expensing

*Employee retention and job creation tax credits

*Extended carry-back of net operating losses

Tax-free financing

*Mississippi is authorized to extend up to $4.9 billion in tax-free bonds

*In the Pine Belt, 14 companies have applied for tax-free financing projects totaling $454 million in capital investment and 774 jobs in coming years.

*Statewide, 92 companies have a total of 106 projects totaling $3.5 billion.

Section: Local
Page: 8C