NEW ORLEANS—Since the floodwaters of Hurricane Katrina poured into the C.J. Peete public housing complex here, Jocquelyn Marshall and her son have traveled from an emergency shelter in Tunica, Miss., to an apartment in Houston, and then to an apartment in another New Orleans neighborhood.
It's been a long voyage for Marshall, who still hopes to return to C.J. Peete.
The possibility for that return came a little closer to reality Jan. 6, when workers started to build the first phase of new apartments at C.J. Peete. As president of the residents' association, Marshall spoke at the groundbreaking along with developers, city and federal officials, and former residents.
“It was a beautiful, sunny day— a day of excitement,” she says.
Hope and delay
After years of protest and delay, work has begun on the first new apartments at C.J. Peete and St. Bernard, two of New Orleans' “Big Four” public housing sites slated for redevelopment after Hurricane Katrina. The redevelopment of the other two Big Four sites isn't far behind. As of February, officials expected work to start at the Lafitte and B.W. Cooper projects in 2Q2009.
More than 3,000 mixed-income apartments in the four redevelopments are slated to open by 2011.
That's well behind the projects' original time frames outlined in 2006. Lawsuits, local approvals, and the chaos in the nation's financial markets have delayed the projects.
However, developers and officials have made good use of the extra time by including residents in the process of designing the redeveloped communities and living up to the principles of successful public housing redevelopments undertaken over the last decade under the Department of Housing and Urban Development's (HUD) HOPE VI program.
“This investment is going to last for decades. The additional time was important,” says Vince Bennett, executive vice president for McCormack Baron Salazar, the St. Louis-based developer redeveloping C.J. Peete.
A tight time frame
In June 2006, more than nine months after Hurricane Katrina tore through the city, HUD Secretary Alphonso Jackson announced his plan to demolish 4,500 units of public housing at four of the largest public housing sites in the city and rebuild the sites as mixed-income housing in just a few years.
The plan includes a mix of homeownership, public housing apartments, housing subsidized with low-income housing tax credits (LIHTCs), and apartments renting at market rates.
The scope of the redevelopments is very similar to projects completed under the HOPE VI program. But the process takes time, especially when it comes to the inclusion of residents and other local stakeholders in the rebuilding of their communities. HOPE VI projects are typically given five years to reach completion, and many run years past that deadline.
However, HUD and the Housing Authority of New Orleans (HANO), which has been directly controlled by HUD officers since 2002, planned a quick redevelopment financed with HANO's annual federal public housing funding, bond funds, and Gulf Opportunity (GO) Zone tax credits. HANO applied for and won GO Zone credits in 2006—and committed to place apartments financed by those tax credits in service by the end of 2008.
The 2008 deadline was quickly extended to December 2010. C.J. Peete is now scheduled to finish its first phase in January 2011.
The plan sparked immediate protests from former residents, many of whom first heard about the planned demolitions by watching CNN and had little faith that any redevelopment would include them, says Marshall.
More than 5,000 public housing residents had been forced out of their homes by Hurricane Katrina. Thousands had been displaced to other cities as far away as Atlanta or even Boston, and as the months passed, they clamored to return.
Some former residents started a tent city outside the closed St. Bernard redevelopment. Others broke into their former apartments at C.J. Peete. A highly publicized lawsuit delayed the demolitions, planned to begin in late 2006, until the lawsuit was resolved with a City Council vote in December 2007.
“There was always the distrust factor,” says Marshall.
And housing officials worsened that distrust by failing to communicate with resident leaders like Marshall in the first stages of the redevelopment. “They should have brought us to the table so we could inform the residents what was going on,” says Marshall.
However, as they progressed, the Big Four redevelopments have gone from leaving residents out of the process to including tenant leadership at almost every step—following the example set by the HOPE VI program.
Several of the developers chosen for the redevelopments in early 2007 have years of experience with HOPE VI public housing redevelopments, including McCormack Baron Salazar and Columbia Residential, one of the development partners for St. Bernard. HUD staff also began to demand that attention be paid to the residents.
“We borrowed very heavily on the HOPE VI principles for residents,” says Dominique Blom, deputy assistant secretary for the office of public housing investment at HUD.
HUD staffers like Blom have learned over more than a decade of HOPE VI redevelopments how important it is to bring residents into the process early on and educate them as to how the process is likely to work. “A cornerstone of a successful redevelopment is working with the residents,” says Blom.
But the people who had lived in the Big Four before Katrina were scattered across the country.
To include them in the process, the developers reached out to everyone they could find by mail and telephone. Some developers even used the “skip tracer” method used by debt collectors to find former residents and make sure they knew they had the opportunity to return to New Orleans.
Once these households were located, the developers offered them help. One of the redevelopment partners of Lafitte, Providence Community Housing—the development arm of Catholic Charities— is providing 300 of the original 860 families that lived at Lafitte before Katrina with what the developer calls “virtual case management” by phone and Internet to connect the former residents with services while they wait to return, with help from HUD funding.
The developers held weeklong design charrettes, following the HOPE VI model, to gather as much feedback as they could from residents, neighbors, and other stakeholders on the plans for redevelopment.
Once the developers contacted these residents, they asked for proposed changes to the development plan.
For example, C.J. Peete residents were adamant that the bulldozers poised to demolish most of the apartments at the project spare its community center, an old movie theater that had been renovated in the 1990s to become the heart of the community.
“It was a haven place,” says Marshall, who before Katrina had coordinated tutorials at the community center for school children ranging in age from 5 to 19. The center also hosted bingo nights, movie showings, community luncheons, and youth activities.
McCormack Baron Salazar and its local development partner, the New Orleans Neighborhood Development Collaborative, had planned to tear down the center and build a new one in another part of the site.
“We had to rework the site plan,” says Bennett. The redesign delayed the redevelopment by five to six months.
Marshall describes the developer's change of heart as a turning point in its relationship with the residents.
The goodwill the developer earned became important when it proposed using part of the original site of C.J. Peete to build retail space to bring jobs and services to the neighborhood. The residents are now letting the plan go forward without protest, although they are asking that some of the retail space be reserved for residents to start their own small shops.
“As part of earning trust, we had to work through the issues,” says Bennett.
Building trust also was necessary to get public housing residents used to a plan that will tear down more public housing than it builds.
Only one of the Big Four redevelopments will build as much affordable housing as was demolished.
That project is Lafitte, which will create a mix of 900 public housing apartments and LIHTC apartments, compared to 896 before Katrina. However, many of those new units will be spread into the neighborhood around the original Lafitte site. “There are a lot of vacant and abandoned properties in those neighborhoods,” says Andreanecia M. Morris, director of public affairs for Providence.
The other three redevelopments fall far short of one-to-one replacement of public housing. “It was impossible to replace all the public housing demolished in the four redevelopments and still meet the goal of creating mixedincome developments that can last,” says HUD's Blom. “We've stayed true to the mission of creating true integrated communities.”
For example, at B.W. Cooper, workers tore down 1,546 public housing apartments. Columbia Residential will replace those with 686 units in two phases—466 in the first phase and 220 in the second. Only a third of those units will be public housing. The rest will be split between homes renting at market rates and affordable apartments that are subsidized with LIHTCs and are affordable to residents earning less than 60 percent of the area median income.
At C.J. Peete, 1,403 public housing apartments will be replaced with a first phase of 410 mixed-income garden apartments and a 40-unit apartment building. Later phases, which will include commercial space and more housing, are still up for discussion.
Just when the way seemed clear to begin the first phases of construction at the Big Four, chaos in the financial markets put the funding at risk for the projects.
McCormack Baron Salazar and its development partners beat the financial crisis to close the financing for C.J. Peete in December 2008—even after the original investor for the project's LIHTCs, AIG SunAmerica, Inc., nearly collapsed in September and broke its commitment to the property. McCormack Baron Salazar quickly found another investor, Goldman Sachs, and went on to close the deal before the end of the year.
Providence plans to close the financing for Lafitte and start construction in the second quarter. Fortunately its LIHTC investor, Enterprise Community Investment, Inc., is also its development partner. Ten affordable for-sale homes, rehabbed in the streets around the original Lafitte site, are already finished and on the market as part of the redevelopment.
Columbia was one of the first of the four to close its financing in December 2008, thanks in large part to its tax credit investor AEGON USA Real Estate Advisors, Inc., which provided $65 million in equity to the $142 million first phase of development.
“They stepped up in a big way as far as maintaining their tax credit pricing,” says Jeffrey von Trapp, senior project manager for Columbia.