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Real Estate Computer Crash Brings Industry to its Knees

New Orleanians don't blithely throw around comparisons to Hurricane Katrina and BP oil spill -- but for those whose lives and livelihoods are tied to buying and selling real estate, such analogies are often heard six weeks into the meltdown of Orleans Parish' property records database.

On Oct. 25, Civil District Court's computer system experienced an unprecedented failure. The servers containing all of the conveyance and mortgage records crashed. The company hired in August 2009 to back up the records had stopped receiving good data in July, and it lost the older data in monthly purges. A batch of fully updated records was recovered, but it was garbled and deemed unusable.

The court eventually was able to recover digital conveyance records from the 1980s up to March 27, 2009, and mortgage data through Aug. 6, 2009. But there's a lot left to do. The consolidated real estate records office is left with nearly 180,000 documents that exist only on paper. To make matters worse, the indexes from them are part of the lost computer databases.

The lack of up-to-date records could bring the local real estate market to near standstill. Without good records, title insurance companies are reluctant to underwrite home sales, or even some refinancing deals, for fear that something could have been filed in the past two years that calls into question the true owner of the property or reflects outstanding debts.

Real estate industry insiders differ on the extent of the damage the shutdown has caused. Some, like the head of the local Realtors association, are predicting massive layoffs at title, inspection and appraisal companies. On the other hand, property sales were off by only about a third in November, dropping from 751 in September to 485 in the month after the computer crash, according to the conveyance office. But the real damage may not be fully reflected in that month, as title research for some of those closing had been completed before the records crashed.

Losses to Industry

The consensus seems to be that if the records can't be fully restored soon, the losses will compound, bankrupting some smaller real estate services companies, depleting the city's tax revenue and quashing important commercial deals.

Real estate agents have thousands of dollars in commissions sitting on the table, and title attorneys, researchers, home inspectors, appraisers and termite contractors are watching their work dry up, said Joe Ory, president of the 4,200-member New Orleans Metropolitan Association of Realtors.

"We have buyers and sellers standing on the roofs of houses and they're drowning in debt," Ory said. "The clerk is trying to drain the swamp...but we have to rescue the people on the roofs. Long-term, draining the swamp is the right thing to do. But right now, buyers and sellers are literally losing their properties and their money."

Even if Ory's pessimism isn't universally shared, nobody disputes that prospective buyers are losing out on low mortgage rates that they had locked in for 30 days, while sellers are being forced to make mortgage payments they hadn't anticipated.

Buyers getting desperate

Other cities, such as Detroit, have struggled with gaps of a few months in their real estate data because of delays in processing paper records, and New Orleans lost about three months of data during Hurricane Katrina, when nearly every city service was knocked out.

But real estate agents and title attorneys say they have never seen two servers full of data knocked out simultaneously, all the backup systems fail and 21 months of records disappear in one fell swoop.

"Only in New Orleans, man. I mean, I love my city, but this is crazy," said Jerome Winder, a real estate agent for 25 years.

Winder said his clients are getting desperate. One elderly woman had scheduled a closing so she could be in her home in eastern New Orleans by Christmas, but that looks impossible now. The title company still must do a title search, something that's extremely difficult without a computerized index.

A condominium purchase Winder was handling was ready to close, but the title company slammed on the brakes when it discovered an old lien on the complex's roof. The lien was released in the last year, he said, but until researchers can find a record of that in the database, the deal can't go forward.

Windward Group, a contractor hired by Clerk of Civil District Court Dale Atkins, is ready to input 10,000 documents a week, but at that rate, the 60,000 missing conveyance records won't be in the database until at least the end of the year, Atkins said. Time-consuming process

Meanwhile, nobody knows how long it will take to re-enter the 119,000 missing mortgage records. Atkins said she's spoken with several data entry companies, but none can meet her desire to have the work done in weeks, rather than months.

"It's not about cost, it's about time," she said. She's paying Windward Group close to $50,000 to restore all the conveyance data, but nobody has been able to come up with a comparable plan for the mortgage data.

"One company wanted to do a sample of 2,000 instruments before telling us how fast they can do it," she said. "Well, I don't have time for you to do a sample."

Any gap in either database leaves a cloud over a property's history and makes title companies queasy about underwriting deals. Title companies can be sued if they guarantee a property has a clear title and it later turns out that it doesn't. There are ways around the crash, but they're expensive and time-consuming -- and they're not foolproof. Brent Laliberte, founder of Bayou Title, said his title researchers and attorneys have been able to complete title research by visiting different city offices, including the Notarial Archives, which were not affected by the crash.

But money judgements, mortgage releases and state tax liens don't appear in the archives, and Laliberte said he's talking with underwriters to figure out whether they can cover deals without knowing if those documents might have been filed.

"As significant as that is, it's not like it can't be done," Laliberte said. "You throw enough people at it and you can get it done. Toward the end of the month, there should be a number of deals that start happening."

Six weeks after the crash, Atkins and her staff are working extended hours and weekends. She has brought in extra help from the Jefferson, Plaquemines and St. Helena Parish clerks' offices. She's paying recruits $13 an hour to do data entry, but so far they're still trying to finish logging the data from documents filed since the crash.

The response to the crisis was halting at first. It took nearly a month to bypass anti-tampering software designed to prevent anyone from retroactively entering a document into the database.

'It was the court's IT system'

But confusion also stemmed from a convoluted system in which the court clerk, an independently elected official, is the custodian of the property records but the technology she relies on to organize the records is controlled by the Civil Court Judges, who meet in private to hire contractors and decide on court spending.

Judge Piper Griffin, chairwoman of the court's information technology committee, and Judge Rose Ledet, who becomes the chief judge in January, both acknowledged that the system failure was the court's responsibility. But they also said that once all of the recoverable data were extracted from the crashed servers, the task of restoring the records fell to Atkins.

"There's no question it was the court's IT system and the failing was with the court's IT," Griffin said. "It's just unfortunate for Dale that it's all falling on her shoulders now."

Atkins is clearly agitated that the judges haven't held someone accountable for the crash.

At the time of the crash, the court had a two-person IT staff. Griffin acknowledged some data may have been lost when the chief technology officer, Tynia Landry, followed instructions from Dell Inc. to troubleshoot the problem to try to get the servers back up and running.

But Griffin said she blames the server failure not on the local staff but on the contractor, a large multinational data-management firm called i365, based in California, that took over the job in August 2009.

The company was backing up the records and purging the old copies every 30 days, but in July, i365 sent the court a software update to install. Griffin said Landry received a message that the installation was a success, but when the crash happened, it was discovered that the installation had failed and from July on, i365 didn't make any proper backups.

"I would have expected i365 to recognize it," Griffin said. "In hindsight, I'm sure Tynia wishes she had checked and double-checked and triple-checked. But if you got a notice of a successful download, what are you supposed to think?"

Marlena Fernandez, a spokeswoman for i365, declined to comment. Griffin said Landry was not available for an interview because court policy is that employees are not to speak with the media.

New tech chief hired

Landry has been in charge of the court's technology for about a decade. Griffin said she wouldn't have the job anymore if she had been at fault. But Griffin emphasized she was speaking for herself and that not every judge was comfortable with leaving Landry in charge. Last week the court hired a more experienced technology professional, Peter Haas, to become Landry's superior. The judges are scheduled to meet Tuesday to discuss the matter.

There is clearly tension between the court's IT staff and Atkins as she tries to fix the problem. Griffin said she had to intervene in a dispute this past week over whether Landry should have immediately addressed a possible server problem in Atkins' office. Haas, who headed a modernization of Supreme Court records, ended up sending Landry a note directing her to make the needs of Atkin's office a priority.

Griffin said the judges recognize the gravity of the situation and are offering Atkins' staffing help when they can, but Atkins said that volunteer spirit is not universal among all of the judges.

Published on NOLA.com -- December 05, 2010 at 11:06 AM

Paula Devlin, The Times-Picayune

Conti Street Hotel Gets $7.8M Modern Makeover

Local owners are breathing new life into a 30-plus-year-old hotel property in the French Quarter. The Hotel Le Marais at 717 Conti St. is reopening after a $7.8 million renovation.

The property between Royal and Bourbon streets, formerly known as St. Ann and Marie Antoinette, has undergone a contemporary face lift.

Wayne Ducote and Joseph Jaeger Jr. are principals with 717 Conti LLC, the entity that owns the 66-room property hotel. Their upgrades include makeovers for all guestrooms and public spaces and a new lobby lounge. The facility also features a private courtyard and heated pool.

Le Marais takes its name from a district in Paris known for its history and architecture. It will be operated under the management of the New Orleans Hotel Collection, a group that includes the Bourbon Orleans, Dauphine Orleans, Wyndham Riverfront, 7 on Fulton, St. Louis Hotel, Crown Plaza New Orleans Airport and Audubon Cottages.

By: City Business Staff Reports Friday, November 12, 2010

Landrieu Says City Will Increase Battle on Blight

Mayor Mitch Landrieu says the city will step up efforts to rid New Orleans of blighted properties.

On Tuesdays, Landrieu said the city will target properties within a five-block radius of playgrounds and in areas with a lot of traffic.

Landrieu has made it his goal to rid the city of up to 10,000 blighted and vacant properties over the next three years.

The mayor says abandoned properties make the city less safe and hurt home values and the city's quality of life.

Landrieu says data from the U.S. Postal Service and Greater New Orleans Community Data Center show an estimated 58,000 blighted and vacant address in the city, the highest percentage of blighted properties in the nation.

posted: 08:11 AM Wednesday, November 3, 2010 By: The Associated Press

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Developers Purchase Chevron Building Downtown

NEW ORLEANS -- It didn't become the new City Hall of New Orleans, as former Mayor Ray Nagin had suggested, but the Chevron building downtown will see new life as a high-tech business center, developers announced Tuesday.

A press release from Kingfish Development LLC announced its purchase of the building at the corner of O'Keefe and Gravier. The purchase price was $6 million, according to records.

The 21-story, 380,000 square-foot office tower will be renamed the City Centre of New Orleans, according to the press release, and will "become a hub for technology based companies" and entrepreneurs. The developers hope to bring 700-800 jobs into the Central Business District.

Nagin had floated the idea of buing the Chevron building for more than $8 million last year, as a new city government complex, saying in essence that the purchase price was too good to pass up. But the idea was panned by most city council members, who voted 4-3 against the idea.

Chevron abandoned the storm-damaged building in 2008, by relocating its local staff to the northshore.

The new buyers for the building, as principals in Kingfish Development LLC, include Hugh Uhalt, Steven O. Medo III, and Robert, Joseph and Chris Bruno.

by Dominic Massa with additional reporting by Marcy Planer/Eyewitness News wwltv.com

Electric Bills Will Rise a Little This Month Due to Natural Gas Prices and a Hot Summer.

Most utility customers in Southeastern Louisiana will see a slight increase in their electricity bills this month because of the rising price of natural gas and above-average temperatures for much of the summer, the peak power usage season.

Utilities don't profit from higher energy prices, but they do pass along the cost to their customers in higher fuel adjustment charges. And while natural gas prices have fallen in recent weeks as moderate weather set in across the country, the fuel adjustment charges on customer's bills lag two months behind real energy prices. That means the power bills that go out this month will still reflect the higher natural gas prices recorded a couple of months ago.

In June, natural gas prices climbed as high as $5.17 per million British thermal units, up more than 20 percent compared with June 2009. Prices have since fallen and stood at $4.35 on Wednesday.

That's down from two years ago, when Louisiana officials declared an energy emergency to give utility customers more time to pay their bills after natural gas prices reached more than $13 per million Btu in July 2008.

"I think you're kind of seeing the middle ground between those two ranges of fluctuating natural gas prices," said Philip Allison, a spokesman for Entergy Louisiana, which serves Algiers, suburban New Orleans south of Lake Pontchartrain and a handful of customers in St. Tammany Parish.

At Cleco Power LLC, which provides power in St. Tammany and central Louisiana, a typical monthly residential bill for 1,000 kilowatt hours of power has risen more than $13 from this time last year, a spike the company attributed partly to the $304 million acquisition of a 580-megawatt natural gas power station in Acadiana in February.

"It is going to be a big benefit to customers," Cleco spokeswoman Robbyn Cooper said about Acadia Power Station Unit 1. "However, in the short term, it's probably going to take two to three years for customers to start seeing that saving."

Local utilities officials have spent months appealing to customers to take steps to manage their power use, which has become a summer ritual. To help reduce utility costs, they recommend replacing air filters; sealing air leaks; closing curtains during the day; and keeping thermostats at 78 degrees, because each degree below that increases bills by 3 percent.

Entergy officials also recommend that customers sign up for level billing, which allows for paying about the same amount for electricity every month, summer or winter, average over a 12-month period based on usage.

"It really helps them ride through months like we're having right now," said Melonie Hall, director of customer service for Entergy New Orleans.

Meanwhile, for the second straight year, Entergy New Orleans customers sweating through the sizzling conditions should be in for some relief: On the heels of a collective $30.3 million rate reduction that went into effect last summer, a typical monthly residential bill dropped by more than $3, compared with this time last year.

That's more than an $18 drop from a typical residential power bill in August 2008, when natural gas prices skyrocketed. Earlier this year, Entergy officials proposed reducing electric rates again, by $12.8 million, while raising gas rates by $2.3 million, for an overall savings of $10.5 million to customers, starting in October, months after the region's period of most intense electricity usage has ended as temperatures cool down.

"That's good news for our customers," Hall said. "Even though the heat is not good news, the base rate reduction is."

As thousands of Gulf Coast residents struggle to pay their utility bills, a group of elected and community officials from throughout the region have joined with representatives from Entergy's Louisiana companies to urge the Obama administration to release $20 million from a federal emergency contingency fund to help cover fuel and air-conditioning costs.

The federal program, known as the Low Income Home Energy Assistance Program, was budgeted at $58.2 million last year in subsidies for heating and air-conditioning costs to 21,000 homes across the state.

Richard Thompson can be reached at rthompson@timespicayune.com or 504.826.3496.

Times Picayune 8.22.2010