In The News › Low-profile agency gains blight blast powers

Oct 11, 2006

Source: Times-Picayune

Low-profile agency gains blight blast powers

Low-profile agency gains blight-bust powers
Unlikely agency key to rebirth
Wednesday, October 11, 2006
By Frank Donze
Staff writer

The New Orleans Redevelopment Authority might best be described as the sleeping giant of city
government.

Entrusted with broad powers to breathe life into blighted neighborhoods, the underfinanced
agency has failed to live up to its promise since it was created about 40 years ago. As a result,
many citizens likely don’t even know it exists.

But NORA’s historically low profile is about to be elevated big time as the revamped authority
assumes what Mayor Ray Nagin hopes will be a lead role in the resurrection of a city still
blanketed with desolation more than a year after Hurricane Katrina.

Armed with an expanded arsenal of financing options approved by the Legislature in the spring
and new appointees added recently by Nagin, the authority is poised to take the helm of what is
likely to be a decade-long rebuilding program the likes of which the United States has never
seen.

Historically NORA has possessed the authority to seize blighted property. But lawmakers agreed
to ramp up the agency’s powers to put back into commerce what many public officials expect will
be a vast inventory of flood-ravaged real estate that property owners either will be unwilling or
unable to restore.

To oversee the task, Nagin has drafted some of his closest advisers to fill seats on a NORA
board that has been able to accomplish little since the storm.

Three of Nagin’s choices — Tulane University President Scott Cowen, health care executive Mel
Lagarde and community activist Barbara Major — served on the Bring New Orleans Back
Commission he created in the weeks after the storm. Two others, lawyer Rob Couhig and former
City Councilman Jim Singleton, were members of the 100-Day recovery initiative Nagin launched
shortly after his re-election in May.

Nagin is expected to fill out the board’s membership soon with the appointment of Herschel
Abbott, the former president of BellSouth Louisiana who now leads the company’s Washington,
D.C., office.

‘Depository’ for properties

Asked to assess NORA’s importance as the city moves to reinvent itself, Nagin offered a oneword
description: “huge.”

Nagin, who has been criticized for failing to tap into NORA’s potential before Katrina, said he
expects the agency to become the “depository” for swaths of wrecked residential property in the
next several years. Some of those parcels will come from homeowners who agree to buyouts
under the state’s Road Home reimbursement program, while others may be expropriated by the
city.

Current plans call for Gov. Kathleen Blanco’s administration to establish a nonprofit Louisiana
Road Home Housing Corp. to temporarily hold title to properties from the buyout program. But
LRA officials have said it is their intention to eventually transfer the bundles of land to local
groups such as NORA to make the redevelopment decisions.

Under a strategy that is still being sketched out, the land could be resold to individual
homeowners, repackaged for larger-scale commercial or residential development or possibly
transformed into green space.

NORA is authorized to accept federal funds, state funds and local funds,” Nagin said. “It’s an
economic development arm that will drive the recovery going forward.”

Janet Howard, director of the watchdog Bureau of Governmental Research, said her
organization is cautiously optimistic about NORA’s ability to help New Orleans rebound.
“The city desperately needs a focused vehicle for coordinating redevelopment activities, because
it’s abundantly clear that the status quo is failing us,” Howard said.

“Having said that, these vehicles come with certain risks. They can be used to promote the
public good or they can be used to promote private agendas. This will be a very powerful entity.
It’s not elected and it will need careful watching to ensure that proper attention is paid to
transparency and coordination with the city’s master plan,” she said.

Underachieving agency

Since its inception in 1968, NORA has possessed wide-ranging authority to assemble land for
development, issue revenue bonds and invest in infrastructure, including sewer systems, roads,
utilities and streets.

But City Hall veterans say the agency has never been put to its full use, limited both by the lack
of vision of New Orleans’ elected leadership and a lack of money.

Under Nagin’s administration NORA, with an annual budget of $1.3 million, has expropriated
about 300 properties a year.

After Katrina, the program was effectively mothballed until March, when the city’s judicial system
began to get back on its feet. Since then, it has moved on about two dozen new expropriations,
with about 50 more cases pending.

Meanwhile, NORA’s pre-Katrina staff of 12 has dwindled to three.

But new board members say big changes are in store for the moribund agency.

A new executive director could be announced as early as next week, when the board hopes to
schedule an organizational meeting. Once the top position is filled, board members said they
hope to begin mapping a strategy to fill out an administrative staff that likely will include new
positions with expertise in areas such as planning and grant-writing.

A top priority will be locating additional sources of money to help the agency do its job. Options
include national foundations and the state Treasury, as well as redirecting federal Community
Development Block Grant money now earmarked for other housing programs.

“The $1.3 million that’s budgeted now doesn’t reflect the sophistication and complexity of what
NORA must evolve into,” said Lagarde, one of Nagin’s new appointees.

Lagarde said the blueprint for how the agency will go about its job lies in the still-evolving
redevelopment plans being prepared by neighborhoods across the city.

Those proposals eventually will be folded into a unified development plan for the entire city,
clearing the way for neighborhoods to apply for a slice of the billions in federal aid targeted for
infrastructure repairs now in the hands of the Louisiana Recovery Authority.

Prioritizing LRA cash
Though details are still being worked out between the city and the state, plans call for NORA to
recommend how much of the LRA infrastructure money will be used.

Considering that some individual neighborhoods are seeking tens of billions of dollars in aid,
Lagarde said it will be impossible to immediately address everyone’s wishes.

“It can’t be done,” he said. “But we must prioritize because we’ve got to start somewhere.”
Some cities, such as Boston and Pittsburgh, have long been in the business of buying,
packaging, redeveloping and reselling large tracts of real estate.

The land-use panel of Nagin’s Bring New Orleans Back Commission recommended that the city
join the list by creating a powerful new agency with the power to buy properties and market them
for redevelopment.

When the idea failed to gain traction, Nagin chose another option offered by the commission: to
simply retool the existing NORA.

During the legislative session that ended in May, state Sen. Ed Murray, D-New Orleans, took the
lead on the initiative, persuading his colleagues to make several alterations to the law that
established NORA, including expanding the board from seven to 11 members.

Murray said that change was made in anticipation of the increased workload that NORA is
expected to take on. With more members, the board will have the flexibility to set up multiple
committees to handle specific tasks, he said.

Though NORA has always had the authority to raise capital by issuing revenue bonds, the
Legislature also agreed to allow bond money to be used for commercial as well as residential
development.

And by tweaking the complex language in the legislation that spells out its bonding authority, city
officials say NORA will now be able to take full advantage of New Market Tax Credits, a
relatively new type of federal tax credit aimed at promoting economic development in low-income
communities.

The credits encourage loans to or investments in businesses wanting to locate or expand in
distressed areas by compensating the bank or investor — in this case NORA — for the added risk
of such a loan or investment. They in turn are able to charge rates or fees that are more
affordable to the business trying to add jobs in an area that needs them.

The credit against federal income taxes can be claimed over a seven-year period.

Expropriation limits

Supporters of the NORA overhaul are concerned that a constitutional amendment approved by
voters last month may hamper the agency from using its expropriation power to advance private
development, a tool that many expected to be used to reinvent neighborhoods devastated by
Katrina.

Local governments have always been able to force private owners to relinquish their property for
a public purpose, provided the owners are compensated for their loss. But neither the state nor
the federal Constitution defines “public purpose,” instead leaving the interpretation to lawmakers
and the courts.

Amendment No. 5, which passed overwhelmingly, imposes limits on the public purpose definition
for the first time, expressly forbidding government from brokering land for commercial developers
who promise to enhance tax revenue.

The legislation would allow for the removal of property that poses “a threat to public health or
safety,” a category that could extend to flooded houses that owners have left ungutted.

However, an analysis by the nonpartisan Public Affairs Research Council says that under the
change, government might not be able to touch a handful of rehabilitated houses in an otherwise
blighted neighborhood, a scenario that could force taxpayers to shoulder costly services for a
few scattered households.

NORA board members are optimistic that the “public safety” provision in the amendment will
allow them the leeway to bring neighborhoods back.

With the new financing tools at its disposal and an injection of new blood, old and new board
members alike predict NORA will be a catalyst in the city’s recovery.

“Going in, my expectations are that considerably more will be done with NORA than has
historically happened,” said Couhig, another Nagin appointee.

“Under the extraordinary circumstances we find ourselves in, I suspect this will be a much more
active board,” he said.
. . . . . . .
Frank Donze can be reached at fdonze@timespicayune.com or (504) 826-3328.

Oct 11, 2006

Source: Times-Picayune

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