The Motley Fool's Mac Greer recently spoke with Lynn Lofton about what's happened to her since Hurricane Katrina wreaked havoc on her life. Lofton, a longtime resident of Gulfport, Miss., is a freelance writer who regularly contributes to The Mississippi Business Journal, Southern Gaming, Mississippi Medical News, and The Biloxi Sun Herald. She is also well known around the Fool as our managing editor's mom. Lynn is living in a FEMA trailer, her house having been damaged in the hurricane.

Gulfport: One year out
Mac Greer: It's one year out from Katrina. How are things looking?

Lynn Lofton: Well, things look much better in that, finally, all the debris is removed. A lot of the houses that were torn down have been moved, although there is one that is blocking a whole lane of my street and some that still are to be demolished.

Very few businesses opened south of the railroad tracks, [an area that] includes Highway 90. I don't know if the business owners did not have enough insurance. I sort of suspect that is what it is. They were probably paid like the homeowners, which was not very much.

Everyone's lives are just so affected. I don't know of any homeowner who has yet received his homeowner's grant check. It is sad that a year later, we are still in the cleaning-up mode.

MG: I understand that your house was damaged. You are currently living in a FEMA trailer?

LL: Absolutely, yes. And when we say "trailer," they are not like nice mobile homes. They are travel trailers that were just meant for people to stay in for a few days, not to live in for a year.

MG: So you will be ready to get out.

LL: Oh, absolutely. And I am here alone. I can just imagine families living in these, because I have had my grandchildren visit, and it is extremely confining.

Wind vs. water
MG: How badly damaged was your house, and to what extent did your insurance cover that damage?

LL: I would say my damage was probably about 50%, but what was done to it made it completely uninhabitable. Fortunately, it was not swept off the foundation, which happened to a lot of people on my street. The house just shifted.

I had the standard homeowner's policy, like most people do, and then because I live so near the water, I had what is called a windstorm policy. Well, all of us called it hurricane insurance. That is why we had it -- for hurricanes. And it is very expensive. If you buy a home and you have a mortgage in this area, close to the beach, you must have it to get your mortgage. You have no choice. The premiums go up every year, and there is nothing you can do but pay it.

Wind vs. water has been the big issue. I did not have flood insurance because I did not live in a flood zone, and I was told I did not need it. I have since purchased flood insurance.

MG: And for those who don't know, you can purchase flood insurance only from the federal government, correct?

LL: That is correct. Now here is a real odd thing. I went to get the flood insurance through my agent, and he said, "Well, you are in a preferred zone. That means you are not in a flood zone. You don't have to have flood insurance." I said that was crazy. I had four-and-a-half feet of water in my house. I can see the beach. I am just a block away. There is nothing standing now between me and the water. That is how crazy the guidelines are. FEMA's new flood regulations come right down the middle of my street, so if you are on the south side, you are in a flood zone. The north side, you are not.

MG: How did the windstorm policy play out after Katrina?

LL: Well, people are just having fits with it. They say, "We thought anything from the hurricane was covered, because everybody here calls it 'hurricane insurance.'" But no. You would think wind-driven water would be covered. The wind is what drove that water.

We did not have a flood here; we had a hurricane. The companies are saying, "Oh, no, there was an exclusion for water." Well, you rarely get a hurricane with just wind.

I did OK, but I didn't get enough to replace things. But the only reason [I got what I did] was that the adjuster had engineers come and look at my house because I had doors and windows blown out, and the roof. They said the wind hit first. That allowed the water to get in. So they did pay me a nice sum.

MG: You are getting an insurance payment because they are deeming that the wind hit first, but if it is deemed wind-driven water, then you are out of luck. And a federal court just ruled -- the first ruling of real significance -- in favor of the insurance companies. Right?

LL: Right. That was a real sad day for people here.

Before and after
MG: For people who aren't familiar with Gulfport, paint us a picture. How did it look before, and how does it look now?

LL: Gulfport is the second-largest city in Mississippi, but, of course, it wouldn't be that large anywhere else. It is home to about 75,000 people. The state port is located here, and that is a good part of the economy -- the things that are imported and exported. There's not as much tourism and gaming in Gulfport as Biloxi has, but there is a lot of business -- shopping, small businesses, that sort of thing. Fishing, and some industry.

MG: Is business coming back to Gulfport?

LL: Not really downtown.

Now one thing that is saving Gulfport is that the growth had been north of the city, above Interstate 10, which is sort of a demarcation line here. A lot of businesses might have been down for a few days because they lost power, but they were not damaged. So that has kept the tax base alive in Gulfport, whereas some of the little towns didn't have anything north of the interstate, so they have lost their taxes from properties and homeowners, plus their sales tax from businesses.

MG: Talk a little about the casino industry a year after Katrina. I know the law changed a few months ago allowing casinos to be land-based. In the past, they had to be water-based.

LL: The change in the law helped them very much, because these large corporations did not want to come back here and invest millions and millions in something on the water that could be blown away again. Some of those casino barges were literally picked up and dumped miles away in the storm. A lot of [the gaming companies] had opened up some temporary casinos in hotels they had. [Now the permanent casinos] can be 800 feet from the water.

I interviewed the executive director of the State Gaming Commission recently, and he said by the end of September, we will have about 10,000 people once again working in gaming on the Gulf Coast, which is about 75% of what we had before. The largest one, MGM Mirage's (NYSE:MGM) MGM Beau Rivage, opens Tuesday [Aug. 29, the one-year anniversary of Katrina making landfall], and it has the most rooms, too. We have only about half of the room inventory that we had before Katrina, and that has hurt tourism.

MG: How much money were the casinos losing after Katrina?

LL: I don't know, revenue-wise, what they were losing. I know what it meant to the state of Mississippi. Every day they were closed, it was half a million dollars not going into state coffers. The casinos had business-interruption insurance. Most all of them paid their employees for three months, but there weren't any [casinos] open at the end of three months, so people had some really tough times. A lot of them moved away to Las Vegas and other places -- Tunica, Miss. A lot of them are working in casinos, and some that were with national companies were placed in another casino.

We quickly got three [casinos] open in Biloxi by the end of 2005. Since then, they have just gradually been opening. I believe now we are back to eight, and the Beau Rivage should be the ninth.

The housing industry
MG: Let's talk about the housing industry there on the coast. I read stories of people selling their houses -- in Biloxi, at least -- for twice what they were valued at before Katrina because the casinos wanted the land for development.

LL: That is true in an area called Point Cadet. Biloxi is on a peninsula, and Point Cadet is the last point of the peninsula. In some cases, homeowners have grouped together and sold the whole tract. Then they would divvy up the money.

It is going to be very hard for homeowners to rebuild in that area. The insurance will just be astronomical, because it is in such a bad place [in terms of being a target for future hurricanes]. There were a lot of very low-income people in that area -- Vietnamese fishermen, old-timers, elderly people who had been there for a long time. They had small houses, and they are not coming back, for the most part.

MG: And in Biloxi, have the homes that survived Katrina gone up in value?

LL: Yes. My son is an appraiser and works closely with Realtors, so I do know that that has happened. Houses that were damaged, for the most part, are not selling. People [may] want to wait through this storm season and see how things go. [But] if you had a house that was away from the beach that was not damaged, oh, it is much more valuable now, because there are so many houses that were lost.

MG: So people want the sure thing and are not speculating on something that may be a fixer-upper.

LL: I have lost track of the [number of] "for sale" signs on my street for damaged homes and vacant lots. Some of these homes did have some damage but nothing really bad. People are wanting some very high prices for them.

The labor market
MG: Let's discuss the labor market. A lot of people, having lost their house, have moved to places like Baton Rouge, Houston, or other parts of Mississippi. So if I am coming down to Mississippi, to the coast, is it hard for me to find a job?

LL: Oh, it is not hard at all. Fast-food places have limited hours because there aren't enough people to work them, from managers to dishwashers. Skilled laborers are very much in demand. Medical, health-care personnel -- very much in demand. There was a big shortage of nurses before the storm, and now [the need] is just crucial.

MG: And wages have gone up?

LL: Yes. Yes, they have. Even some of the fast-food places are offering signing bonuses to get people to come to work.

MG: And what businesses are doing well in the wake of Katrina?

LL: Well, anything in construction -- commercial and residential. I can't tell you how many furniture stores have opened. Home furnishings. Places like Home Depot (NYSE:HD) and Lowe's (NYSE:LOW). If you sell appliances, bedding . those are just booming. Electronics. I lost every single electronic [item] and every single appliance that I have. Multiply that by thousands and thousands and thousands.

Even small retail . clothing stores. Because there again, a lot of people had a few clothes with them, but that is all they had left. Banking has done very well because there have been FEMA checks and insurance checks, and now people are getting ready for the grant checks. Even cars. Automobiles were lost. Anything that people had to replace, [you'll find a company] doing well.

You just mentioned banking. One of the articles you wrote recently was titled "Banks Still Rising to Challenges From Hurricane Katrina." You focused primarily on People's Bank, which at the time had around 17 branches, seven of which were destroyed in the storm.

LL: In some cases, there was nothing left standing but the vault.

MG: So the money was still dry, but there wasn't anything around it.

LL: Right. The president of Hancock Bank, which is a big bank system here, said his banks opened the next day with flashlights and folding tables and chairs. There was no electricity. People could not use an ATM, and people had to have cash. A lot of people were going a little north of here, to some of the smaller towns, to get money. A banker at a small community bank in Wiggins, which is between Gulfport and Hattiesburg, told me that he had people coming in who didn't even have checks. They were just writing on pieces of paper. Some people didn't have their identifications or their ATM cards. In some cases, people literally swam out [of their homes].

The intangible costs
It seems that after Katrina, you really got a sense of people's character.

LL: Yes. That was the first time in my life when I knew exactly what material things I had and what greater blessings I had in family and friends, who stepped up. Just think about it. You probably don't know how many pairs of socks you own, but you do after you go through something like this.

MG: When I was preparing to talk to you, I was thinking about the great quote by Faulkner: "The past is never dead. It is not even past." Do you think that will be the case for the psyche in Mississippi for the next generation? Or do you think it will fade away?

LL: I hope it doesn't fade away, so that we will always be prepared for storms and that more people will evacuate the next time. But I hope we are not just haunted by it.

I do worry about children and what they are going through. I have had my grandchildren here visiting, and they live in New Orleans. You just drive around, our everyday lives . we are just surrounded by disaster. It looks so horrible. It is so depressing. I am concerned about that, and a lot of mental-health professionals are, too. I read that the suicide rate is up, the divorce rate is up . all those things because people are so mentally stressed.

Always before [Katrina hit], Hurricane Camille was the benchmark. Nobody forgot Camille, and that was more than 30 years ago. I think now we have a new benchmark in Katrina, and I believe it will make us more cautious.

MG: I know from the reports that a lot of houses that survived Camille did not survive Katrina.

LL: Absolutely. The mayor of Biloxi says that Camille killed more people in 2005 than it did in 1968. By that, he meant that people thought, "Well my house made it through Camille; it can make it through anything." And so they stayed. And a lot of them lost their lives because they were basing it on what happened with Camille.

MG: What has surprised you the most over the past year?

LL: I think the feeling of unity that we have in my neighborhood. We have a luncheon every Sunday at 1:00. There was a couple who got back in their house last November, and they were the only people on the street living in a house. We have the luncheon there, in their yard. It is amazing. I have met people in the neighborhood whom I didn't even know before, and we just feel such a unity and such a bond. We pass along information, and we encourage each other and support each other. That has been really good.

Toward the future
MG: How much longer do you expect to be in your FEMA trailer?

LL: Well, I got a lot of work done on my house, and at least I was able to get doors and windows back on, and a new roof. I have my walls back up inside, too. So now, I am awaiting my state grant, my homeowner's grant, that our wonderful governor, Haley Barbour, secured. He does know how to go get money. I have been told that I have been approved.

People are starting to receive their paperwork, and I have been told I should probably have my money by mid-September. If I can get my workers back, I could be back in the house probably a month after that. So I expect to spend the holidays at home.

MG: Well, I really appreciate your time.

LL: You are so welcome. I enjoyed talking about it. It is painful, but you want to talk about it, because you want people to not forget.

Please don't forget us. We are still struggling.

For additional coverage on Katrina:

Mac Greer does not own shares in any of the companies mentioned in this article. Home Depot is a Motley Fool Inside Value recommendation.