The vacant brick building, with its boarded-up windows and sagging roof, stands out in the middle of a block of well-attended Irish Channel homes.
It has been empty for nearly a decade, even as the neighborhood around it flourishes. Greg Fortner has a plan to change that.
The executive director of the Housing Authority of New Orleans sees the Annunciation Street apartment building and more than 200 other sites like it — spread from Uptown to New Orleans East — as an integral part of the future of the authority and the city.
The abandoned “scattered sites” present the possibility of an ongoing revenue source for the cash-strapped agency and a way to create additional affordable housing in a city with insufficient housing stock and quickly rising rents, Fortner said.
His plan, the first major HANO initiative launched since Fortner took over the agency’s top job last summer, is for the housing authority to partner with developers to resurrect the buildings as mixed-income, mixed-use developments, with HANO sharing in the profits from whatever is built on the site.
He’s got the backing of Mayor Mitch Landrieu’s administration and support from City Councilwoman LaToya Cantrell, who heads the council’s Community Development Committee and has been outspoken in calling for more affordable housing.
But at least two other public officials have called on Fortner to jettison the idea. Councilwoman Stacy Head and U.S. Sen. David Vitter have said HANO should stick with an existing plan to sell the sites at auction.
In a letter to HANO board members earlier this year, Head said she was “perplexed” by the proposal, which she argued would deprive the city of immediate and “desperately needed” property tax revenue. HANO doesn’t pay taxes on its property, but private buyers of the sites would.
HANO at one time owned nearly 1,400 scattered-site housing units on more than 250 properties in New Orleans. Scattered sites, often small apartment buildings with fewer than a dozen units, are alternatives to massive housing projects.
They are most commonly used to increase affordable housing in cities, while easing the concentration of low-income residents at a single site. Critics, however, say they can threaten stable residential neighborhoods and property values.
Over the years, and particularly following the destruction of Hurricane Katrina, HANO shut down dozens of the units as they fell into disrepair and the agency lacked the money to operate them. Just 85 units on 28 sites are still operational. The housing authority has another 230 properties totaling 41.5 acres and ranging in size from 1,300 square feet to 431,000 feet.
Subject of debate
The future of those properties — some of them vacant lots, others dilapidated structures; some in thriving neighborhoods, others in areas desperate for redevelopment — is now the subject of debate.
HANO’s last executive director, David Gilmore, wanted to dump the properties and proposed that they be sold at auction to the highest bidder.
Gilmore, who was hired to run the agency while it was in federal receivership, said the properties were too expensive to maintain and would be better off in the hands of private developers.
With the approval of the U.S. Department of Housing and Development, HANO put more than 100 sites up for bid in late 2013 and received offers on about 95 of them. But the deals ultimately fell through after HUD wouldn’t agree to sign off on offers that came in below what the agency considered market value.
Instead of going back to the drawing board with a request for higher bids, Fortner scrubbed the plan altogether.
Gilmore’s plan, he said, left HANO without the means to secure its long-term financial future. With federal aid for public housing drying up and HUD cutting back overall on funding that goes to local housing authorities, HANO needs a plan for generating “nontraditional revenue,” Fortner said.
“We reassessed and noticed the opportunity for investment to develop affordable housing and also to get a better return on investment for the scattered sites,” Fortner told HANO’s Development Committee last month when he formally introduced the new scattered sites strategy.
HANO generates revenue from a variety of sources, including federal housing vouchers, tenants’ rent, the Federal Emergency Management Agency, grants and interest income. The agency’s annual budget is more than $250 million.
What’s more, Fortner said, HANO needs to develop the properties so that it can add more affordable housing to the city’s stock. Right now, HANO has 13,250 families on its waiting list for Section 8 housing vouchers. Another 5,070 families are on the waiting list for public housing.
Landrieu’s office supports HANO’s plan for that reason. In addition to the more than 18,000 people on the waiting lists, one-third of the city’s population spends more than 30 percent of its income on housing, Landrieu aide Ryan Berni said.
Fortner’s scattered-site plan is part of an affordable housing strategy the city will formally introduce this fall, Berni said.
“We believe this fits into what we are trying to do to fit the needs of affordability in the community,” he said. “There are really high-quality private developers and nonprofits in the market who are able to partner with HANO to redevelop these sites.”
HANO has prequalified 20 companies and individuals as potential developers for the sites. Each responded to a request for qualifications with a plan for the redevelopment of multiple sites or specific properties.
They will be contacted by HANO for more specific proposals as the agency decides which sites it wants to develop. That process will take place neighborhood by neighborhood, beginning with a series of community meetings to assess the wants, needs and concerns of people who live near the sites, Fortner said.
Beyond its capacity?
The about-face, however, has touched off debate about what HANO’s role should be and how much of a hand it should have in shaping neighborhoods.
People who had hoped the initial process would result in the sale and immediate redevelopment of the vacant sites are disappointed and angry, said Donald Vallee, president of the New Orleans Landlords Association.
“The housing agency needs to be in the paperwork business and get out of the bricks-and-mortar business,” Vallee said. “It’s absurd. They should do what they agreed to do previously.”
Vallee said he doesn’t believe HANO has the capacity to take on another major project as it continues the massive redevelopment of the Iberville housing project and deals with the recently stalled development at two other sites.
“The landlords are so frustrated. There’s just a lack of cooperation. There’s no working together at all,” he said.
Attorney Quin Breland, speaking at a HANO meeting in October on behalf of homeowners who live next door to a vacant scattered-site property on Seventh Street in the sought-after Irish Channel neighborhood, urged the agency to sell the site for fair market value to ensure that it would be turned into a single-family home and not used again as an apartment complex.
“We would really like to see that property back as a single-family home,” Breland said. “It would fit with the character of the block, which is almost all historic singles and doubles.”
Breland said he would be interested in bidding on the site.
“It would be a win-win-win,” he said. “HANO would receive what would be a substantial amount of revenue. I think that’s a pretty hot area; it would bring a lot of dollars to your organization.”
But Monika Gerhart-Hambrick, policy director for the Greater New Orleans Fair Housing Action Center, said HANO and New Orleans residents would be better served by the creation of more affordable housing stock, particularly in in-demand areas like the Irish Channel and the rest of the city’s relatively unflooded “sliver by the river,” where prices keep reaching skyward.
A ‘huge, huge mistake’
Councilwoman Cantrell added that home prices in “some communities (in New Orleans) are up over 140 percent. It’s a clear indicator that we do not have enough affordable housing. I think we’re in a crisis if we don’t do something.”
Cantrell called the scattered sites “low-hanging fruit” that the city can pluck to get a handle on affordability and head off some of the worst effects of gentrification.
She said HANO’s previous plan would have been a “huge, huge mistake” because it would have increased the number of people leaving certain neighborhoods of the city entirely because they can’t afford higher rents and home prices.
“It’s especially true where we’re seeing transformation happening in the community. That’s not a bad thing. We want to see neighborhoods and housing in communities come back,” Cantrell said. “This is one stopgap measure that government can use to create that balance.”
However, the plan has been derided by Vitter, who met with Fortner in March to discuss the initiative and issued a statement hours later saying that HANO’s departure from its original proposal “doesn’t make sense.” He wants the properties sold to HANO’s nonprofit Crescent Affordable Housing Corp., which in turn would offer them to private bidders.
“By completely reversing its strategy, HANO is depriving taxpayers in New Orleans of well over $6 million that could be used to revitalize the community,” Vitter said in his March statement. “After fighting through HUD red tape to get approval for HANO to sell these properties, the reversal doesn’t make sense. If the properties aren’t sold, they could remain vacant and dilapidated for years to come, which is harmful to those communities and neighborhoods.”
Following a vision
Head has made a similar argument. In a letter to HANO board members, she said recent real estate trends show that HANO’s scattered sites are worth at least $12 million, a number HANO disputes.
Fortner said the latest estimate from HANO, in 2013, put the value of the sites at $2.7 million. A $6.9 million estimate from HUD in 2014 “double counted,” he said.
Head, however, said that “if these properties were sold and returned to the tax rolls, they would, in the first year alone, generate more than $178,000 in property tax revenue. Obviously, that number could more than double as structures are built on the properties.”
Head told the board that HANO could use the money it collects from the sales to improve its remaining occupied scattered sites and provide additional services.
Fortner said the housing authority still will consider selling properties, but that won’t be its first priority. He’s proceeding with his vision.
“This is an opportunity that most housing authorities don’t have,” he said. “So whether by design or by coincidence or by sheer luck, the fact that they land-banked these scattered-site properties gives us tremendous opportunities that other housing authorities don’t have.”