Over $28 million worth of tax credits and block grants have been approved for New Orleans affordable housing development projects through partnerships with the State of Louisiana. The funding was granted via Louisiana Housing Corporation’s (LHC) 2019 Piggyback Awards, which helps create multifamily housing opportunities. The exact allocated sums are $3,885,685 in Low-Income Housing Tax Credits (LIHTC), and $24,509,820 in Community Development Block Grants (CDBG). As a result, 642 new affordable housing units are expected to be produced.
There are three things worth mentioning regarding this agreement between the Louisiana Housing Corporation and the City of New Orleans:
- The City partnered with the Finance Authority of New Orleans (FANO) to make it easier for developers to access mortgage revenue bonds (MRB) to secure construction funding for their projects and complement the equity funding coming from their received tax credits
- Upon request from the City, the LHC will approve of higher-than-normal construction costs to account for unique building challenges in New Orleans (e.g. elevation requirements and flood-proofing)
- A portion of the environmental review process will be conducted only once as a combined review for both the City and the LHC, instead of conducting the same review twice by different authorities, thus speeding up the process. Much of the extra expenses and delays in affordable housing development are stemming from duplicate tasks. It’s a good sign, that local authorities are willing to address the issue of wasteful practices.
It’s refreshing to see that the City of New Orleans is so determined to tackle its housing affordability problem so energetically. Kudos to Mayor LaToya Cantrell for coming to an agreement so quickly with Louisana state to secure much-needed funding for the city. New Orleans has been struggling with its own affordability crisis and is lagging behind in achieving the target numbers the city has set for generating new affordable housing units. In 2015, HousingNOLA released a report on the housing needs of the city, and announced a 10-year plan to create 33,000 new affordable housing ‘opportunities’.The first half of the plan prescribed the creation of 7,500 such housing opportunities by 2020. That’s 1,500 new opportunities each year for a period of five years. By this fall (September 2019), a total of 6,000 new opportunities were supposed to be created. The current number for the past four years stands at 1,882.
The word usage of ‘opportunity’ instead of ‘unit’ is intentional as the number may not all mean new housing units. Their study revealed that oftentimes it would be enough to provide financial support to tenants to pay their utility fees or to upgrade existing housing units to be more energy-efficient. In New Orleans, there isn’t a shortage of housing stock per se. There is a shortage in available affordable-rate units, meaning either new rent-controlled units need to be added to the market or the housing costs (e.g. utility expenses) of existing units need to be reduced.