 |
03/29/11 - Public, private money brought under one roof
Blighted areas targeted by housing program
By David Hammer, Times-Picayune
David Morgan and his development team already knew how to mix public and private financing programs to build affordable homes, hoping to inspire the rebirth of a long-blighted section of New Orleans 7th Ward.
But if he expects to expand his efforts to the barbed-wire junkyard across the street, or a run-down section of Central City, or about 70 other vacant lots hes identified across New Orleans, hell need cash. So, too, do dozens of other developers who often cant afford a slew of pre-construction studies and assessments and, even when they can muster the cash, find it equally difficult to justify selling the properties at affordable prices.
That help appears to be on its way with the introduction of the Louisiana Loan Fund, a congressionally mandated, state-sponsored $37 million fund meant to accelerate the development of affordable housing in areas hit by Hurricanes Katrina and Rita. The money comes from the federal Department of Housing and Urban Development as well as private banks and charitable foundations.
Congress set aside $17 million in Community Development Block Grants from HUD and encouraged Louisiana officials to work with nonprofit groups Enterprises Community Partners and the Local Initiatives Support Corp., or LISC, which specialize in cultivating private investment for affordable development projects. In turn, Enterprise and LISC convinced Living Cities, a consortium of 17 banks and philanthropic organizations – including heavyweights as JP Morgan Chase, DeutscheBank, the Robert Wood Johnson Foundation, the Bill and Melinda Gates Foundation and the Rockefellar Foundation – to provide another $30 million from private sector.
The money will be used to finance as many as 4,500 new and rebuilt affordable houses and apartments. Developers can tap the fun for low-interest loans up to $200,000 for site work, zoning issues, environmental and engineering studies, and architects fees, and loans up to $3 million to acquire the properties. In return, they must make the units affordable for buyers or renters with incomes below 80 percent of the area median, or about $46,000 for a family of four.
Morgan and his partners already used a similar process to start their $3.4 million Frenchmens Hope development of 20 modular homes on a swath of the 7th Ward that had been vacant for 40 years.
The success of the Lowes Home Improvement store across Elysian Fields Avenue inspired the development, and Morgan believes the projects first completed home has in turned inspired neighbors who were once afraid to rebuild. The three-bedroom, two-bath raised house with high-fashion lighting, new appliances and a picket fence right out of Mayberry has provided a rebuilding beacon at Home and Frenchmen streets through the Elysian Fields overpass and the developments other 19 empty lots offer a comparatively bleak backdrop.
The cost of each home would have been $185. But Morgans team tapped into the citys Neighborhood Improvement Fund for a grant that allowed the full prices to fall to $160,000. With a pre-arranged 5.35 percent interest mortgage, monthly payments of $1,124 were still too high for people making less than 90 percent of the median income, Morgan said. But then Southern University at New Orleans stepped in, paying $20,000 per lot to reduce the interest rate to 2.25 percent and the monthly payments to manageable $839.
I cant wait to see 20 homes on the lot and the whole community revitalized, Morgan said.
