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Story: “Three years later, 6,500 subsidized New Orleans apartments fester”

by Katy Reckdahl, The Times-Picayune

More than three years after Hurricane Katrina, nearly 6,500 privately owned, federally subsidized apartments sit unrepaired in the state of Louisiana. Most — about 4,000 — are in the New Orleans area.

Before the storm, the apartments made up nearly 5 percent of the city’s total rental stock and about 40 percent of the subsidized housing affordable to extremely low-income residents, according to PolicyLink, a nonprofit housing research organization.

Built during the 1960s and 1970s, most of the apartments subsidized by the U.S. Department of Housing and Urban Development grew out of a federal effort to create more low-income housing by giving private developers low-interest, federally insured loans. Some properties have as few as a half-dozen apartments; others have hundreds. The effort, when it started, was HUD’s first stab at public-private partnerships, an approach it’s now using to remake the city’s Big Four public-housing developments: St. Bernard, Lafitte, B.W. Cooper and C.J. Peete.

But today, about 4,000 shuttered apartments across the city have gone largely unnoticed, despite the pitched public fights about the 4,534 public housing units demolished in the “Big Four” developments. (Before the 2005 flood, the Housing Authority of New Orleans operated about 5,100 occupied apartments in its public housing complexes.)

HUD did not provide detailed data on the number or status of all the subsidized rental properties, but information the agency gave politicians, researchers and housing advocacy groups suggests that about 800 of the apartments have reopened while 4,000 remain closed.

‘The biggest secret’

But it’s difficult to be exact, because the information coming from HUD is incomplete and hard to get.

“It’s like it’s the biggest secret in the universe, ” said Sen. Mary Landrieu, whose office has tried, unsuccessfully, to get detailed data from HUD about these properties.

In response to a request, HUD recently sent Landrieu a list of six properties that will be completed by March 2009 and a rudimentary progress report of 22 other metro-area properties including a brief status note, such as “foreclosure in process.” The list omitted at least five of the city’s unoccupied properties, home to nearly 400 subsidized tenants before Katrina.

The charts given to Landrieu reflected only properties that had “recovery plans, ” HUD spokesman Lemar Wooley said.

The recovery of the HUD-assisted apartments, Wooley said, has been delayed by the same factors that have affected the rebuilding of the city’s housing stock after Katrina: drawn-out battles over insurance, administrative delays and developer wariness of areas such as eastern New Orleans, where recovery remained uncertain for a while.

Housing advocates say the U.S. Department of Housing and Urban Development should take a more active role in reopening the affordable apartments, half of which were occupied by senior citizens. Without these rentals, they say, thousands of working poor, disabled and elderly people still live with relatives or struggle to pay steep post-Katrina rent.

HUD has yet to release a definitive plan that outlines which properties will reopen and which will not, and why. And since the properties are owned by a long list of private owners, it’s difficult to determine who’s doing what.

“Every deal is different, every property is different. That makes it hard to track what’s going on, ” said Laura Tuggle, head of the housing-law unit for New Orleans Legal Assistance.

Project-based Section 8

In many cases, HUD supplemented the loans to developers with per-unit monthly subsidies, which allowed landlords to collect market-rate rents while keeping tenants’ rent no higher than 30 percent of their income, the same threshold applied to public housing residents.

It’s known as “project-based Section 8, ” because the rental subsidies are attached to the physical apartments, unlike tenant-based Section 8 vouchers, which renters can use to lease any apartment.

In legislation signed into law last week, Landrieu inserted a provision streamlining the transfer of dormant HUD rental-subsidy contracts. If a property won’t be rebuilt, HUD can shift that subsidy to a new developer, who can use it to make its own financing more viable.

In May, Landrieu introduced the Gulf Coast Multifamily and Assisted-Housing Recovery Act, which includes more money for properties that house the elderly, along with higher rent subsidies to account for landlords’ increased costs. The bill has not been heard by the full Senate.

Instead of supplying affordable housing, some of the large apartment complexes present a massive blight issue. Especially in eastern New Orleans, neighbors and community groups are weary of the shuttered complexes, some of which were dilapidated long before the storm and are now considerably worse, said Landrieu spokeswoman Stephanie Allen.

Concentrated in the east

Before Katrina, the subsidized apartments were a key strategy for housing the poor.

The lion’s share of the project-based properties are in eastern New Orleans, which was being developed during the 1960s and ’70s when HUD first implemented the program. HUD discontinued the program in 1983 and has moved toward tenant-based vouchers, which the agency contends are less costly and less apt to concentrate poor renters in one area.

But by then, nationally, the program had created a huge stock of privately owned, federally subsidized housing: 1.5 million apartments in 2007. That’s more than the nation’s total units in public-housing complexes, which numbered 1.2 million in 2007, according to HUD.

In New Orleans, for the elderly who rented about half of the city’s subsidized units, rent might be $150, depending on the size of their monthly checks. A family headed by a short-order cook making $16,000 a year would pay $427 in rent.

But Christopher Homes, which provides housing for the elderly through the Archdiocese of New Orleans, didn’t plan the renovation of Nazareth Inn’s 270 subsidized apartments until the city’s plan for eastern New Orleans were clear, said executive director Dennis Adams.

Nazareth won’t reopen until the end of this year. Because many of his senior citizen renters don’t have cars, he worried about the return of grocery stores and pharmacies within walking distance. “For us, it’s all about mission, ” Adams said, “but we have to operate with good business sense.”

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Katy Reckdahl can be reached at kreckdahl@timespicayune.com or 504.826.3396.

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