The Louisiana State Bond Commission on Thursday rejected funding for a controversial New Orleans affordable housing project that was sought by a Memphis, Tennessee-based religious organization with a history of problems managing lower-cost apartment complexes.
The Rev. Richard Hamlet and his Global Ministries Foundation had sought $24.5 million to buy and rehabilitate the 442-unit Hidden Lakes complex in New Orleans East, which provides housing for low- and moderate-income renters.
The Bond Commission’s decision, which was made without dissent, opens the way for new companies and developers to purchase the complex, said state Rep. Wesley Bishop, the Democrat representing the neighborhood surrounding the complex.
Hamlet is out of the country and unavailable for comment, according to an operator at GMF, and no one else returned a call Thursday seeking comment.
GMF owns about 11,000 apartments in eight states. Company officials have acknowledged that some of its complexes had problems but insisted they were relatively few and took place in projects that already were deeply troubled.
The proposed purchase and renovation of the Hidden Lakes complex didn’t involve state or federal money. It was to be paid for by a bond to be repaid by rent proceeds that the state would have guaranteed.
“My vote is not reflecting a policy to reject such projects,” said Lt. Gov. Jay Dardenne, a member of the commission. He said the company’s past egregious behavior justified rejection of this proposal.
Prior to voting, the bond commissioners watched a news report recently broadcast on an Orlando, Florida, television station that showed apartments in that city owned and operated by GMF flooded, with plasterboard falling down and other unrepaired damage.
Commissioners also had reports about GMF complexes in Memphis being found uninhabitable and security concerns so grave in two Jacksonville, Florida, complexes that the City Council there passed an ordinance withholding rent payments until the problems were corrected.
But it was the problems at Hidden Lakes and its management that led opponents to testify against the loan at the Bond Commission meeting Thursday and at several previous meetings.
At the commission’s meeting in July, the complex’s manager, Patrick Coffey, of MultiFamily Management Inc., called tenants “inmates” and implied that New Orleans East already has lots of crime. He later apologized.
The new proposal included a provision to fire MultiFamily Management if the deal went through.
Dawn Hebert, a Lake Willow resident, said the residents had met with Hamlet and he apologized. But the New Orleans Police Department listed 67 incidents in the neighborhood since January.
GMF’s strategy is to find apartment complexes with a high percentage of renters relying on federal subsidies and then leverage the tax-free dollars for tax-free, state-guaranteed loans to make the purchase, she told the Bond Commission.
“Y’all are stewards of the state’s money. Is this highest and best use?” she asked. “They’re already mismanaging properties in multiple states.”
“Why do we give him additional funding, when he hasn’t been able to fix it in 21/2 years” that GMF has run the complex? asked Gail Armant, who lives near the complex.
Underlying the dispute is what homeowners call the impact of sending hundreds of low-income residents from former public housing developments around the city to live at privately owned facilities — located in predominantly middle-income, African-American neighborhoods — without proper financial support, more police and additional sanitation services.
State Treasurer John Kennedy, who chairs the Bond Commission, said he was concerned that the commission’s decision would spark a lawsuit. That’s why he put the issue on the agenda for a final up or down vote, he said.
“We wouldn’t normally do this,” Kennedy said. “But I do think everybody wants to vote.”
Bishop said he was not worried about litigation. “We dotted all the i’s and crossed all the t’s,” he said.
Follow Mark Ballard on Twitter, @MarkBallardCNB.