New Orleans is in an affordable housing crisis. There’s a new plan to help solve it.
By Sophie Kasakove
Source: The Times-PIcayune | Nola.com
November 4, 2023
Two years after New Orleans voters rejected a millage supporting a city housing fund, the City Council has a new plan to address the persistent shortage of affordable places to live.
Council members on Thursday voted unanimously to create a housing trust fund. The move is an early step towards securing a dedicated stream of potentially millions of dollars from the city’s annual budget to help build affordable apartment complexes and other housing developments.
The proposal comes as advocates, frustrated by the city’s lack of progress on creating more affordable housing, have pressed local officials to supplement federal funding with money from local sources.
The crisis has been made more acute in recent years by high insurance rates, property taxes and construction costs. The New Orleans area needs more than 47,000 additional affordable rental units, according to a report by the National Low Income Housing Coalition. The city currently has just 158,828 units total, according to HousingNOLA, a coalition of public, private and nonprofit housing advocacy organizations.
“Despite a great need for housing, we do not dedicate an annual amount of city dollars to creating and maintaining affordable housing,” said City Council member Lesli Harris. “This housing trust fund will allow the city more flexibility to fund projects that create desperately needed affordable housing.”
The trust fund plan, which hasn’t been funded yet, arrives as dedicated local funding for housing has been hard to establish. For three decades, starting in 1991, a property tax millage generated funding for a Neighborhood Housing Improvement Fund. That money— between $3 and $4 million a year in the millage’s later years— could be used for housing support, but it could also be used for economic development and blight reduction, and city officials could split it in any way they wanted.
Projects to preserve and develop affordable housing received a small fraction of funding in some years and none in others.
In 2021, voters narrowly rejected a ballot measure to renew that tax after the Bureau of Governmental Research, the local non-partisan good government group, said that the city had failed to create an adequate spending plan and oversight for the money.
Only for housing
Council members — all seven of whom co-authored the ordinance launching the new trust fund — hope that this strategy will prove more successful at mitigating the city’s affordability crisis.
The trust fund has a narrower set of uses than the millage: to provide gap financing to affordable housing developers, preserve and rehabilitate affordable rental units, and support new affordable housing models and strategies like community land trusts and foreclosure prevention.
The fund will not require residents to cough up additional tax dollars through a property tax millage. Instead, it will shift a certain percentage of general fund revenues each year to the trust fund.
Still, there are questions about the plan. It’s not clear if money will be shifted from other programs, or how much might be allocated each year.
The majority of the programs would be managed by the Office of Community Development, according to Alison Poort, Harris’ chief of staff.
Deputies of Mayor LaToya Cantrell said they supported the move.
“A housing trust fund could be a game changer,” said Tyler Russell, the interim director for the city office that directs land use and housing policy, in a prepared statement.
Little money for affordable housing
In the absence of dedicated city funding, the city has for years relied almost entirely on federal and other grants to subsidize affordable housing development and preservation.
But those funds are limited and often come with requirements that make them difficult to apply to specific projects, said Harris.
With few available subsidies and costs rising, affordable housing developers have struggled to make projects pencil out.
New Orleans created just 97 new affordable housing units between September 2022 and August 2023, according to an annual “report card” for the city by HousingNOLA. Another five affordable units were produced by Habitat for Humanity.
In its report card, HousingNOLA recommends that the city establish a trust fund that generates over $17 million a year in order to develop and rehabilitate between 1,000 and 1,500 units per year.
The council in May approved a one-time appropriation of $32 million for a fund designed to help affordable housing developers close financing gaps.
That funding, cobbled together from federal relief money and other sources, was estimated to support the completion of up to 1,000 affordable units. None has been spent yet, according to John Lawson, a spokesman for Cantrell, who said the city is still evaluating proposals.
Poort said there wasn’t yet an estimate for how many units the new trust fund could support per year.
Housing trust fund
Creating the fund is an early step in the process to make money available for new housing. The council will need to establish a mechanism to actually fund it, as well as create rules for how the revenues can be spent.
Harris said that the council hopes to put a charter amendment on the ballot in next year’s election that would allow voters to approve the new annual budget item.
A charter amendment would make it more difficult for future city councils to re-appropriate the money, but it’s not required to start receiving general fund revenues. Harris plans to request funding from the administration in the 2024 budget, but has not decided how much, Poort said.
The council has also not determined what percentage of general fund revenues it’s seeking for the fund, said Poort. Some cities with housing trust funds similar in size to New Orleans, like Pittsburgh, dedicate around $10 million per year, Poort noted.
Past mistakes
Affordable housing advocates say they are glad to see the city embrace a tool that other cities across the country have found useful in addressing affordability crunches.
“Having these kinds of funds is absolutely essential,” said Terri North, CEO of Providence Community Housing, a New Orleans-based affordable-housing developer. “The city needs to take responsibility and take a bigger part in producing affordable housing.”
Others, though, said that they’ll be watching closely to make sure that the new fund doesn’t get waylaid by the same mistakes as the previous housing fund.
“This is a good first step, but we’re no longer at the point where one step is good enough,” said Andreanecia Morris, executive director for HousingNOLA.
Morris and other housing advocates supported renewal of the previous fund but agreed that the city needed to be more transparent about how it was used.
That millage request failed by just 940 votes.
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