People in New Orleans Are Being Pushed Out of Their Homes--And Now, They're Pushing Back
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The decision to tear down the city’s major public housing developments came despite an escalating campaign by displaced residents and activists that included taking over abandoned housing units and rallies in housing authority offices. That December, hundreds gathered outside the building where the city council was meeting. They were locked out, with police in riot helmets reportedly Tasering and arresting dozens of protestors. Inside, council members voted unanimously to demolish the Big Four.
With so little political clout, displaced residents have fewer and fewer ways to hold private developers accountable. And there is much about the Big Four redevelopment that calls out for public disclosure and accountability.
These redevelopment projects came with nearly $100 million in community development block grants, as well as $34 million in Gulf Opportunity Zone tax credits. These so-called Go Zone credits, designed to provide businesses with incentives for investing in “difficult development areas,” are worth more than typical tax credits. After hurricanes Katrina and Rita, Louisiana received nearly 20 times its regular allocation of tax credits.
Officials at HUD and the Housing Authority of New Orleans (HANO) gave the Big Four’s tax credits and federal block grants to several big out-of-state firms and their local partners. Some of the developers were later found to have financial and personal ties to Alphonso Jackson, who was HUD secretary under George W. Bush and later faced a federal investigation for alleged misconduct. (Jackson resigned in April 2008.) In a series of investigative stories in the National Journal beginning in late 2007, journalist Edward Pound revealed Jackson’s ties to Columbia Residential, the developer chosen for the St. Bernard. Jackson, who had worked as a private consultant for the company, was still owed as much as $500,000 in fees when Columbia got the contract.
Pound later discovered connections between Jackson’s wife, Marcia, and the design firm Kennedy Associates, which had partnered (under the name KAI Design & Build) with St. Louis-based developer McCormack Baron Salazar and gained the contract for the C.J. Peete. Scott Keller, Jackson’s deputy chief of staff, played a key role, Pound reported, in selecting and participating in the four-member panel that awarded the contracts to replace the Big Four.
A typical project—for the St. Bernard redevelopment, for example—represents $27 million in community development block grants, as well as $7.4 million in Go Zone tax credits to sell to private investors for equity. The cost of demolition and construction is covered by the government funds, and meanwhile, the developer is leasing from the city vast acres of land in the urban core for practically nothing. It costs the developers literally a dollar a year for a 99-year lease of this land—all of it potentially prime real estate near the center city and downtown areas. With the total cost of replacing the Big Four estimated at $762 million, taxpayers are paying developers an average of $400,000 per new apartment.
For ten years, the tax credits can be used on other projects, too. Even more enticing, the contracts specify that the Big Four must be converted to mixed-income housing, which means that just a third of the units will be “deeply affordable” for the poorest public housing residents. Their rent would be based on income levels at 20 percent of the area’s median income. The next third, affordable for another tier of residents, would be rented at 40 to 60 percent of the median income. The last third would be rented at market rates to middle-class residents able to pay up to $1,500 a month for a one-bedroom apartment.