Concerns Arise Over Funding For Apartments – State Senator questions “who’s watching the shop in these agencies?” – Louisiana Housing Finance Agency

Maybe the Louisiana Housing Finance Agency just ‘overlooked’ the changes in this project like they ‘overlooked’ (and still do) the mold inspection reports when involved in the sale of Jefferson Lakes Apartments in Baton Rouge.  katy

State Senator Questions Developers

NEW ORLEANS — State Sen. Ann Duplessis said she is concerned over an apartment complex in New Orleans East called Levy Gardens being built with state and federal money.

“It was wrong for these developers to do a bait and switch,” said Duplessis. “I was skeptical about the project from the get go, but decided to go along with it to get more affordable housing after Hurricane Katrina. But now I want to know, who’s watching the shop in these agencies?”

Duplessis said she is steaming mad over a stalled $20 million development designed to help build affordable housing. Federal disaster recovery money, channeled through the state, helped finance the project.

“The original plan was to build 100 units of townhomes. They were single story single family homes with their own garage and green space and it was supposed to be a gated community,” said Duplessis.

The office of community development financed $11 million of the project through a loan. But somewhere along the way plans changed to between 400 and 500 units: 13 three-story buildings with three to four bedroom apartments.

“That is a drastic change in what the original concept was. And it was changed without any notification, without any input, without going through the system and processes that serve to protect communities,” said Duplessis.

Duplessis said she began her own investigation. She said she quickly realized the marketing and feasibility study that the project was based on had errors in it and that part of the project was not properly zoned. Her findings sparked a lawsuit a recent court order put a stop to construction.

The Louisiana Housing Finance Agency, which oversees how the funds are distributed, is now preparing to conduct its own investigation.

“I do intend to take further look at that study and see how all those changes have transpired,” said Wayne Woods, chairman of the LHFA Board.

So was this a lack of oversight on their behalf?

“I don’t think this was a lack of oversight. I think that the agency and staff did what they normally would have done. I just think we need to go back and take a look at those processes,” said Woods.

At this point, Duplessis said she doesn’t care if the project is salvaged or not.

“In my mind, I want it to go away,” Duplessis said.

Woods said he will meet with the LHFA board in Baton Rouge Wednesday where he will begin his investigation into what happened. He said there is a possibility $4 million in tax credits to the developer, could be transferred if someone takes over the project.

WDSU called a representative for Levy Gardens and left several messages. He did not return our calls for comment.

wdsu.com

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U.S. housing crisis also hitting the wealthy

By Nick Carey

HINSDALE, Illinois (Reuters) – Less than a year ago, few people in this affluent Chicago suburb expected the subprime U.S. housing crisis would hit close to home.

“We thought Hinsdale was virtually immune and we wouldn’t see any foreclosures, but we have,” said Dave Hanna, managing partner of Chicago-based Prudential Preferred CRE and president of the Chicago Association of Realtors. “Nowhere is immune.”

With a pretty red-brick downtown lined with stores, good schools and a railway line to nearby Chicago, Hinsdale has been popular among wealthy doctors, lawyers and executives.

It has also seen a 37 percent jump in foreclosure filings this year, according to research firm RealtyTrac, and local data shows the average home sale price has fallen to $1.07 million from $1.15 million in September 2007.

The consequences of years of devil-may-care mortgage lending during the U.S. housing boom were first felt among America’s poorer home owners. But if that is where it started, it did not stop there.

“People think this is just a lower-income problem,” said Mabel Guzmann, a Century 21 realtor in Chicago. “It’s not.”

Guzmann was recently called in to try to sell a $1.2 million home in foreclosure, but found it riddled with mold.

“There are few buyers for properties like that,” she said.

Along with their less moneyed fellow citizens during the housing boom, many wealthy Americans leveraged their home equity to buy anything from a car to stocks.

“High income does not necessarily mean smart or responsible,” said Michael Lefevre, head of the National Association of Mortgage Professionals (NAMP), a trade group.

He argues for financial literacy classes at U.S. high schools.

Now the market is awash with excess properties, depressing prices so much that many Americans owe more than their homes are worth. A sinking U.S. economy and huge job losses — more than 10 million out of work by December — have not helped.

Observers forecast it will take the overall market a long time to recover. In the meantime, it could be difficult to sell expensive homes: buyers may find getting a mortgage tough.

“I think it’s going to get worse,” Lefevre said. “2009 is going to be ugly.”

HOUSING HANGOVER

Many of America’s wealthier homeowners are already feeling the pinch. According to research firm First American CoreLogic, in August 2008, 5 percent of U.S. jumbo prime mortgages — those over $417,000 — were behind payments 60 days or more.

That was higher than the 3 percent of normal prime mortgage loans 60 days or more behind, but well below the 29.5 percent delinquencies seen for subprime loans, or the 15.4 percent rate for Alt A mortgages, which are a step above subprime.

But that 5 percent rate for jumbo delinquencies was more than three times the 1.4 percent rate in August 2007.

“Jumbo prime mortgages have seen the biggest increase in delinquencies of any category over the past year,” said Sam Khater, chief economist of First American CoreLogic. “The worst affected areas are states like California that have seen sharp price declines. But few areas are unaffected,” he said.

The squeeze many wealthy Americans find themselves in is that they borrowed far too much against those homes.

“People bought the boom on the assumption property values would continue to rise and they leveraged their homes to increase their wealth,” said Dennis Hedlund, founder of iEmergent, a forecaster for mortgage and real estate companies.

“People have seen the value of their assets, including stocks, decline. But their debts haven’t,” he said.

That has left many affluent borrowers trying to offload homes via a bank-approved short sale — taking an offer for their home below what they paid to avoid foreclosure. But that process has been criticized in recent months as being too slow, or because banks insist on unrealistically high offers.

“Many banks still have no effective system in place to deal with short sales,” said Ron Rosen, a realtor in Lighthouse Point, Florida.

But Prudential Preferred CRE’s Hanna said he has seen an improvement in how Illinois banks handle short sales, as he feels the impact of the crisis has sunk in for more bankers.

“A few months ago, these bankers maybe saw the secretary down the hall lose her home, but they couldn’t relate to that,” he said. “Now, it’s maybe the guy in the office next door. It has just become a lot more personal.”

reuters.com

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Families move into homes that Brad Pitt built – New Orleans

By Stacey Plaisance – The Associated Press – 12/02/2008

NEW ORLEANS – It was a bittersweet moment for Brad Pitt, walking through the Lower 9th Ward neighborhood where families were preparing to spend their first holidays since Hurricane Katrina.

Those families are moving into the first six houses built through Pitt’s Make It Right foundation. One home was already strewn with green garland, lights, wreaths and red bows.

Still, Pitt is restless.

“I’m really happy for the families that are going to be here, but I can’t help but think about the families that aren’t,” Pitt said Monday. “It’s a push-pull for me. The excitement is that it’s being proven, that it’s working. The frustration is that we have a long way to go.”

Make It Right was launched by Pitt a year ago. The program calls for construction of 150 energy-efficient homes in a section of New Orleans washed away when Katrina broke levees Aug. 29, 2005.

So far, six homes have been built. Two more are under way, and construction on another 14 begins in early 2009. Pitt smiles, gets a little giddy even, when talking about where the project will be in another year.

“You’re going to see 100 homes here, mark my words,” he said. “It’s nice to see a few, but I’m anxious to see 100, 150, 1,000.”

Pitt said that by December 2009, the Lower 9th Ward should be one of the nation’s largest “green” neighborhoods.

“It’s amazing,” he said. “This place that suffered such injustice and so much death can become one of the primary examples of a high-performance neighborhood. It really is amazing.”

Inez Converse, 71, isn’t concerned about her area setting any records. She’s just happy to be back in the neighborhood she lived in for more than 35 years before Katrina. And she said she was glad she had the chance to thank Pitt personally.

“He didn’t have to do this,” she said. “I’m just grateful he is doing it.”

Monday was a busy day for Pitt and partner Angelina Jolie, who appeared at a screening of Pitt’s new film “The Curious case of Benjamin Button.” The couple — Pitt in a suit and tie and Jolie in a form-fitting cream L’Wren Scott dress — was the highlight of the red-carpet event.

The film, which also stars Cate Blanchett, opens Dec. 25. But because it was filmed in New Orleans in 2006 and 2007, Paramount Pictures and Warner Bros. held a special screening here.

“It’s a gorgeous, gorgeous film,” said Pitt, who in the movie plays a man who begins life as elderly and grows younger with time. “It’s a film that makes you want to hug your kids and call your folks.”

Pitt also described the movie as “a love letter to New Orleans.”

“There’s a sense of magic here, so it made this fantastic story almost believable,” he said.

Pitt said his fondness for the city led him and Jolie to buy an early-1830s masonry mansion in the French Quarter. Pitt said the home was recently renovated to accommodate the needs of the couple and their six children. He quashed recent rumors that the couple had sold their home.

While the homes built by Pitt’s project are more contemporary than the Creole cottages and shotgun-style homes typical of New Orleans, they incorporate some elements used in the area for generations, such as high ceilings and shaded porches.

The homes also have solar panels and other features that help cut energy bills by at least 75 percent, Pitt said. Other architectural elements addresses challenges of the area, including ventilation and mold- and termites-resistant materials.

“The misunderstanding of architecture is that it’s all about aesthetics,” Pitt said. “It’s not. First and foremost, it’s about function.”

The homes, costing $150,000 on average, are for property owners who can pay insurance and taxes. Monthly payments are based on applicants’ income and subsidized by Pitt’s foundation.

Pitt said his motivation to see this project through stems from a lot of things, among them his “love for architecture, a love for technology, a love for fairness and justice.” But it also stems from his love “for all things New Orleans.”

“There’s just something about this place,” he said.

sltrib.com

On the Net – Make It Right

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Category 5 hurricane protection plan is delayed again – New orleans

by Mark Schleifstein – The Times-Picayune
Saturday December 06, 2008

A long-delayed Army Corps of Engineers plan for protection against a Category 5 hurricane — a storm as large as or larger than Hurricane Katrina — will be delayed until at least June, and maybe longer, the project’s manager says.

Further, the final document won’t be a plan at all, but rather a menu of about two dozen alternatives for Congress to further study and debate, a recipe for additional delay.

Top Louisiana officials had envisioned the Louisiana Coastal Protection and Restoration Study — which the corps should have forwarded to Congress a year ago — as a concrete but flexible action plan that Congress could simply approve and the corps could then build. Instead, it will contain four or five alternative project lists for each of five planning areas along the coast, said Tim Axtman, corps project manager.

The latest delays and the increasingly labyrinthine approval process do not sit well with Louisiana’s two U.S. senators and state officials.

The corps’ delays “represent another stark illustration of the broken bureaucracy that plagues the agency,” said Adam Sharp, spokesman for Sen. Mary Landrieu, D-La.

“The timetable again runs afoul of the clear congressional directive — passed not once, but twice — that the corps make engineering recommendations irrespective of prevailing policy concerns,” Sharp said. “Congress specifically directed the corps not to run the report through the meat grinder of (the Office of Management and Budget) and other politically motivated offices.”

U.S. Sen. David Vitter, R-La., said he will demand an acceleration of the schedule, noting it will now be at least a year and a half late.

“From what I know of the report, it’s far more general and far vaguer than what we mandated,” and does not fully include the input of state and local officials, as Congress had directed.

Garrett Graves, director of the Louisiana Office of Coastal Protection and Restoration, said state officials don’t understand why the corps report is taking so long and has cost more than $23 million, when the state completed its own coastal master plan in 13 months for only about $4 million.

“They still don’t even have a real end in sight and appear to be very much off course,” Graves said.

Winding road to approval

Axtman said the corps’ New Orleans District office plans to complete the study’s main report for transfer to the agency’s Vicksburg division and Washington, D.C., headquarters offices by Dec. 20.

There, the study will be reviewed for policy concerns, a process that also will include the office of the assistant secretary of the Army and possibly the White House. After those recommendations are incorporated, a draft will be delivered to a peer review committee of the National Academy of Sciences in late February or early March.

The report will be released to the public at that stage, he said.

The peer review will take three or four months, followed by a final set of revisions that will again be reviewed by senior Army officials, Axtman said. Only then will the chief officer of the corps recommend approval of the report, followed by approval by the assistant secretary, and delivery of the report to Congress.

That process could last until June or later, Axtman said.

Once the report is complete, the corps will then attempt to identify individual projects that can be built under the congressional authority already granted to existing levee or restoration projects, Axtman said.

For instance, gates or much higher levees could be built in the New Orleans area through post-authorization changes to the existing Lake Pontchartrain and Vicinity or West Bank and Vicinity levee construction projects.

Such a strategy could allow the corps to address environmental concerns through supplemental environmental statements, rather than a full environmental study for all projects, he said.

Graves said the state worries that strategy could produce endless delays for projects that beg for swift action to preserve public safety.

“I think it was the intention of Congress that the corps come up with an actionable document: something the corps and Congress could actually act on,” he said.

State wants action

The state would prefer a “programmatic authorization,” where all the projects proposed in the report would be authorized by Congress with approval of the report. The state and the corps, though, would still have to return to Congress for appropriations to build individual projects.

Congress originally ordered the corps to complete the Category 5 study by December 2007, when it appropriated $20 million for the study as part of appropriations bills that provided money for rebuilding levees after Katrina.

The study was to include higher levees and other structures, combined with coastal restoration features designed to reduce surge height and protect the levees, with a goal of protecting the entire Louisiana coastline from “the equivalent of Category 5” storms.

It also was to develop the proposed projects outside the traditional corps approval process for levees and other water projects — meaning the cost of individual projects would not be judged against their value to the national economy.

The study quickly ran into criticism from state and congressional officials in 2006 when the corps announced it would first develop a “risk-informed decision matrix” for determining which projects should be included, rather than the traditional benefit-cost analysis.

Study of individual projects also was delayed until the corps completed a complicated series of studies to determine what type of hurricanes could occur in the Gulf of Mexico and the type of surge they could produce.

That information was needed to determine whether several New Orleans-area proposals — such as the construction of huge gates at the Chef Menteur and Rigolets passes, or the shape of levees along St. Bernard Parish — might actually increase the height of surges on the Mississippi Gulf coast, corps officials said.

‘Billions with a b’

The decision matrix also was used to weigh the value that local residents and special interests place in environmental features, such as the fisheries benefits of restoring wetlands, versus the risk-reduction features of longer and higher levees, Axtman said.

“We’ve used that process to screen down to the most viable proposals, and what we’re finding is that trade-offs do exist,” he said.

In most areas, Axtman said, the risk-reduction benefits of wetlands are not as great as built structures such as higher levees. But in some areas, residents place a higher value on the environmental values of the wetlands.

Protecting the wetlands could result in an increase in what the corps refers to as “residual risk”: the potential for flooding that will remain with lower or fewer levees, he said.

First estimates for projects east of the Mississippi River were about $56 billion, while the highest cost for the area just west of the river, including Jefferson and Lafourche parishes, was estimated at $34 billion.

The selection process already has driven down the expected cost, Axtman said.

“But the potential for those very large ‘billions with a b’ numbers are still there,” he said.

Reducing the cost of structures generally means less protective structures and higher flood risks.

But in some cases, he said, adding lower second lines of defense could result in the same level of risk reduction that much higher structures could produce. For instance, additional levees or gates in front of some of the levees now being built to protect the area from 100-year storms could result in 400-year or 1,000-year protection.

“One thing we do have to address in looking at the cost, informing Congress, is that these plans will take some time to construct,” he said, which means inflation will add to their price tags. “This is not a couple-of-years process. It will be an expensive system with big enlargements that’s going to take 10, 12, 15 years to construct.”

nola.com

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Greener Grounds – New Orleans – Brad Pitt and Co. – Make it Right Foundation

mirplayground002

Continuing his efforts to turn the Lower Ninth Ward into an environmentally sustainable, largely solar-powered and “high-powered neighborhood,” Brad Pitt and Co. (through his Make it Right Foundation) today opened the most technologically advanced playground in North America. 

Kellogg Park (so-named after the contributing Kellogg’s Corporate Citizenship Fund) features $500,000 worth of equipment, landscaping and donated manpower, with donations from architectural firms BNIM and John Williams, and the mid-century modernists at KOMPAN Inc. (I guess the days of tanbark, sawdust and rusty monkey bars are over.) 

Make it Right, along with the PlayGreen Initiative, developed an eco-friendly play space, with all the bells and whistles Pitt and Make it Right have integrated into their batch of sustainable homes — rest assured, they’re not replacing the Lower Ninth with an Ikea. The site is another example of the power of potential Pitt’s invested in the neighborhood’s future.

Tim Knowlton, Kellogg Company vice president of corporate social responsibility, dedicated the park to the kids, who, after three years, finally get a post-K playground — that just happens to be worth half a million dollars. 

In further New Orleans playground news, on Nov. 28, KaBOOM!’s Operation Playground completed a project at the Abramson Science & Technology Charter School with the help of more than 200 volunteers from the community and from the State Farm Bayou Classic. The next scheduled Operation Playground construction is Dec. 6 at Gentilly Terrace Elementary School.

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