Hurricane Ike shakes Galveston's economic boom

By Carey Gillam

GALVESTON, Texas (Reuters) - Long-time Galveston resident Sylvia Hernandez has survived several hurricanes in her 72 years. But after riding out Hurricane Ike's wall of water and wind in her tiny two-story island home, Hernandez has decided it's time to leave.

For her, Galveston is gone.

Before Ike crashed ashore early on Saturday, leaving a pile of wrecked homes and businesses in its wake, the coastal barrier island of Galveston was in the midst of what local officials called an economic "renaissance."

Now residents are wondering if they will return -- a sentiment they share with other storm-struck cities like New Orleans.

"I'm not staying," Hernandez said, standing under an avocado tree in her debris-strewn backyard. "I think this is the end of Galveston."

Four days after Ike crashed ashore in Galveston early Saturday, the city of 60,000 is on an emergency footing, with city officials warning of a health crisis and lack of basic necessities like clean water, power and flushing toilets.

Before Ike hit, Galveston's prospects were bright, with $2.6 billion in investment under way or in the pipeline, according to the city's Chamber of Commerce.

Damage to the port, which has a $1 billion-a-year impact on the city, has not yet been assessed. It will take about four weeks before it is fully opened to traffic, said port director Steve Cernak.

In addition to bustling tourism in its historic Strand area and a surge of cruise ship trips, the city has moved to recast itself as a health and biotechnology center, anchored by a $600 million buildout of the University of Texas Medical Branch and a top-level biosafety lab.

With 6,600 new housing units under way and more than 3 million square feet of new commercial space under development, "Galveston really has been experiencing an economic renaissance over the last eight to 10 years," said Jeff Sjostrom, president of Galveston Economic Development Partnership. "Obviously this is a challenge to us."

A MARATHON AND NOT A SPRINT

Now, Galveston's recovery will be "a marathon and not a sprint," Sjostrom said, expressing confidence that the city will eventually rebuild.

But some residents wonder if it makes sense to keep investing in a barrier island city so vulnerable to fury of storms.

Galveston is famous for a hurricane in 1900 that killed some 8,000 people. After that, the city built a protective seawall and flourished as a seaside resort for decades.

The seawall might have saved Galveston this time. But all told, thousands of homes and businesses were damaged by waters that surged 11 feet and insurance adjusters are just starting to stream onto the island to tally the losses.