Pres Kabacoff has built, or rebuilt, much of modern New Orleans.
He co-founded what is now HRI Properties in 1982 to redevelop historic structures. The company, which also builds and manages hotels and apartment complexes, expanded nationally and now boasts more than $1 billion in assets and 2,000 employees.
Locally, HRI developed the American Can Apartment Complex, the Hibernia Bank tower, the Bywater Art Lofts, the Hyatt French Quarter, the Homewood Suites on North Rampart Street, the Blue Plate Lofts, and the former Iberville and St. Thomas housing projects. That Kabacoff brought Walmart to the Lower Garden District as part of the mixed-income St. Thomas/River Garden development generated no small degree of controversy.
Kabacoff, HRI’s chairman of the board and largest individual shareholder, is as colorful as he is controversial. He shares an architecturally eclectic Bywater home with his wife, prominent voodoo priestess Sallie Ann Glassman.
At 72, he has at least one more grand project in mind: the rehabilitation of the former Charity Hospital as part of the larger redevelopment of the upper Canal Street area.
“That,” Kabacoff said recently in his Hibernia Bank tower office, “would be my swan song.”
What are the trend lines, both positive and negative, that you see playing out in New Orleans?
It’s unclear. We are a tale of two cities. Until Hurricane Katrina, we were being overwhelmed in poverty and heading in a dangerous direction. After Katrina, we got more money per capita than any city in history. The utilization of those dollars improved the city.
I look at New Orleans sort of like a clock. Twelve o’clock would be (the city) sustaining (itself) and moving forward. (After Katrina) the clock went from 9 o’clock to 11.
The question for us now is whether we slide back to 9 o’clock, or do we become self-sustaining? We know we’re not going to get another chunk of money.
We’re going to have to make the right decisions, come together as a community, and be very precise in what we do. If we can do that, we can regain our status as the queen city of the Gulf South. If we don’t, then (the city will regress like) Gary, Indiana, or Flint, Michigan. We’ll see.
Downtown is undergoing a surge of residential and retail development. Given that the city’s population growth seems to have leveled off, is there a risk of over-developing?
Despite our difficulties, we have one of the great downtowns in America. When you combine the French Quarter, the Warehouse District and the Central Business District, it becomes a wonderful place to live in or visit. It’s an asset. To the extent that those neighborhoods have been improved, that’s very healthy for our city.
The real estate cycle goes up and down. Right now, we don’t have job growth, and we have a number of products coming, both in hotel and residential. Without growth, the new product may take a while to absorb. But that’s not a major concern of mine. The finance market will not allow you to keep building if you don’t get the occupancy.
Many of the downtown residential developments are expensive. An increase in well-paying jobs is seemingly necessary to fill those pricey units.
What you can get is migration, even without job growth. Those people that can afford to will come to this great land that we have in the downtown environment, with all the restaurants and entertainment, and the walkability. This area will do well.
The more fundamental question is, how does the (rest of the) city and metropolitan area do?
The ban on short-term rentals in the French Quarter has put a dent in the market for real estate there.
Airbnb is a new phenomenon. We went quickly from 1,500 (short-term rental units) to 4,000. I don’t think the city thought out the regulatory process correctly. They didn’t anticipate unintended consequences. We need another regulatory visit of that subject to make sure that it doesn’t overwhelm neighborhoods.
The city is not getting the compensation it should (from short-term rentals). And you have issues with safety regulations that, if you’re in the hotel business, you have to pay attention to, and if you’re in the Airbnb business, you don’t.
You’re not going to stop Airbnb. It’s disruptive, but every industry in the country is facing technological disruptions. You need to be smart about it. We need to take what we’ve learned and be open to correcting it.
Which of your local projects met with the most resistance? Was it the Walmart element of the St. Thomas/River Garden initiative?
There’s really no comparison. When we pioneered the revitalization of the St. Thomas public housing project, we were cutting cloth that had not been laid. The preservation community felt that putting a Walmart in the Uptown area was waving a red flag in front of a bull. They had many friends in the media, and I found myself in the newspaper every other day for a year and a half.
The city administration had promised to put up $20 million for the infrastructure; (then-mayor) Marc Morial told me he just didn’t have it. So I suggested to him that we could find one of these big box stores and put it on the blighted industrial area of the riverfront on Tchoupitoulas. He said, “If you can pull that off, go ahead.”
It was a very difficult exercise. You not only had the Walmart issue, but you had people that wanted all affordable housing. You had people that didn’t want any affordable housing.
(John) McCain said, “When you’re getting flak from all sides, you must be above target.”
Orleans Parish had been devastated by the loss of retail sales; all the retail development happened on the perimeter of the metro (area). And the public wanted quantity at low prices. The concern was it was going to shut down (retail outlets on) Magazine Street. The opposite has happened. I knew I had to wait for history to prove that one out, but I think we came out all right.
And it allowed the River Garden project to be developed with mixed income housing and create a model for the revitalization of all our public housing. We later did Iberville and called it Bienville Basin. There was no controversy, really. I’m not sure if that’s because of lessons learned, or we didn’t have a Walmart.
The Walmart controversy relates to an ongoing conversation about preservation versus progress. Is New Orleans now more receptive to progressive development?
The Walmart/St. Thomas (project) was an outlier. Most of the work we did in the Warehouse District or the Central Business District or Mid-City or Federal City across the river was apple pie. So I wouldn’t read too much into the Walmart controversy.
That said, in recent times, the city could use a little gentrification. We were about 650,000 people in 1960. New Orleans went to 430,000 until the night of Katrina. Over that 40-year period, we lost our middle income. We didn’t lose our poor. Bringing some middle income back to the city was actually very healthy.
It’s different than perhaps New York or Boston or San Francisco, which were overwhelmed with the lack of affordability. (In New Orleans) that issue has just raised its head in the last four or five years. These neighborhoods are becoming so successful, and when you add Airbnb to it, you’re eliminating affordable housing.
It’s a legitimate issue and a legitimate concern. But killing growth is not the solution. Trying to ameliorate that with fair housing is something you have to pay attention to, because we have to be a city that works for everybody.
Do you see a point where environmental concerns over coastal erosion and sea level rise start to discourage outside investment in the city?
Our existential question? I’m very focused on this. I’m working with a group called Changing Course to create a new channel for the Mississippi River. The notion is that you could have a new channel at English Turn and instead of capturing 10 percent of the alluvial soil that comes down and now flows off the continental shelf and is wasted for land-building purposes, capture 100 percent of the soil.
That needs to be studied to see if it works. But we better do everything in our power to take care of that reality. The new state master plan retards land loss by only one-third; we’ll still be losing land dramatically.
I’m not one who says scientists are making this up. We better be hyper-focused on this. Because the early warning signs will not be loss of land, although that is a warning sign. It will be red-lining by mortgage companies, lenders, insurance companies.
I don’t see an immediate crisis. But I have children. I worry about it.