The board that governs the Housing Authority of New Orleans delayed a decision Tuesday on picking a firm to revamp 18 “scattered site” properties in the Bywater neighborhood, citing concerns that the top-scoring developer has not done enough to provide work for smaller local firms.
That move went against the recommendation of HANO Executive Director Gregg Fortner, who said the agency’s initial request for proposals did not ask that developers divvy up work among smaller firms, at least not in the way some board members wanted.
After some discussion, the board decided to table the issue until the next meeting of its Development Committee.
The HANO staff had given ITEX Group of Houston the top score among seven firms that responded to an August request for proposals to revamp one or more of the 18 Bywater properties.
This would be the first major “scattered site” redevelopment since the agency in 2014 announced plans to rehabilitate, not sell, about 230 of those properties, which often are small apartment buildings with fewer than a dozen units.
The 2014 decision was an about-face from former HANO federal receiver David Gilmore’s plan to sell the vacant lots to the highest bidder, a proposal backed by City Council President Stacy Head, U.S. Sen. David Vitter and others who said selling the lots would generate more tax revenue for the city. HANO does not pay taxes on its property, but private buyers of the sites would, they said.
Fortner’s plan has the support, however, of Mayor Mitch Landrieu, Councilwoman LaToya Cantrell and others who say it would bolster the city’s supply of affordable housing at a time when living costs continue to skyrocket.
Of the more than 200 sites in its control, HANO is focusing first on the Bywater neighborhood, Fortner said, because it provides the best chance for HANO to both increase the city’s affordable housing stock and capture a return on its investment.
HANO mandated that developers designate two-thirds of all their Bywater housing units as “affordable,” or designed for individuals who earn less than 80 percent of the area median income. At least a quarter of the units have to be public housing, designed for even lower-income families.
Developers also were required to adhere to HANO’s requirements for 20 percent disadvantaged business enterprise subcontracting and 5 percent women’s business enterprise subcontracting, as well as a requirement that firms hire public housing residents or subcontract with companies owned by public housing residents.
ITEX scored 83 of 100 possible points on a chart that measured those and other desired qualities, such as experience and financing for the project.
The other bidders were Perez/Harmony Neighborhood Development, which scored 81; Integrity Development Partnership, 65; the New Orleans Redevelopment Fund, 59; the team of REO LLC, Nationwide Real Estate Corp., Doucette and Associated General Contractors, 35; ETI Inc/Bywater Housing Development LLC, 34; and Chartres Street Station, 20.
Copies of the proposals were not made public.
But ITEX’s high score was not enough for board President Dwayne Bernal, who said HANO should try to get ITEX and other developers to divide their contracts with smaller, local firms. Rather than ITEX handling all 18 properties, it could give a handful of them to a local firm, he said.
“I want to make sure that we made it very clear that we were interested in making these smaller development opportunities for smaller developers,” he said.
ITEX Executive Vice President Clark Colvin said his firm would be willing to make a local developer a part-owner in the project or have a local firm participate through a subcontract. He said it has not identified the firms it would choose.
“We need to make sure that whoever we get is going to be a real asset to the development,” he said.
Fortner pointed out that the request for proposals did not require that large firms involve smaller firms. He said he also was concerned with timing.
“If we fold this solicitation in and then go out with these new parameters, we’ve lost a year,” he said.
Bernal said it is just as important to create economic opportunities for local residents as it is to create affordable housing. He proposed tabling the selection, and no other board member objected.
REO LLC, which received a score of 35, handed out its plans for the Bywater sites. That team, composed of Steven Kennedy, Eugene Green and Sterling Doucette, planned to build and lease 114 apartment units at the various sites.
Kennedy and Green praised the delay and said HANO needs to take a hard look at its scoring process.