Unclear future for city-led affordable housing as tax is set to expire
By Michael Isaac Stein
Source: The Lens
December 27, 2021
A local property tax dedicated to affordable housing and blight reduction is set to expire at the end of the year, after a majority of New Orleans voters rejected a ballot proposition to renew it earlier this month.
The rejection came as a blow to local housing advocates, who said the $3 million to $4 million it generated annually was vital to help stave off the effects of the city’s affordable housing crisis, which has only been exacerbated by the coronavirus pandemic and Hurricane Ida.
For decades, tax proceeds went to the city’s Neighborhood Housing Improvement Fund, or NHIF, which has been used in recent years for emergency rental assistance, repairing storm damage, assisting first time home buyers and incentivizing new housing developments.
It was a narrow defeat. With 50.8 percent of voters casting “no” ballots, the margin was fewer than 1,000 votes. And already, some are calling for another vote to restart the tax.
Cashauna Hill, executive director of the Louisiana Fair Housing Action Center, argued that support for the NHIF remains high in New Orleans, and that the renewal’s defeat could be largely blamed on the extremely low profile nature of the race, and the near total lack of institutional support from government officials.
“No one put any resources into educating the public on the fund and what it’s accomplished,” Hill said. “The NHIF has always had broad support whenever it’s been polled. But it’s also clear that many people had no idea that the NHIF was on the ballot, even in the weeks before the election. So it suggests that this very disappointing result was about a lack of education.”
In an already low-turnout election — about 22 percent of city voters cast ballots on Dec. 11 — the housing renewal proposition was especially low-profile.
It didn’t have a clear champion in city government. Mayor LaToya Cantrell, for her part, took a back seat for the entire process after voters rejected a property tax plan she put forward in 2020, which would have renewed the housing tax, but severely cut the Public Library budget.
After the defeat, Cantrell announced that she had no immediate plans to try to renew them again. The City Council took the initiative to place the housing renewal on the ballot, indicating at least some level of support from the council. And a Cantrell official told The Lens at the time that the administration supported the council’s decision to put it on the ballot. The administration also defended its use of the NHIF in a recent report from government watchdog the Bureau of Governmental Research.
But the tax didn’t receive many explicit endorsements, and officials seemed unwilling to spend the financial or political capital to create a comprehensive support campaign.
Without that official backing, the task fell to local nonprofits to spread the word. Hill said that wasn’t enough to inform tens of thousands of potential voters.
“What we could do wasn’t enough,” Hill said. “So ideally, the Mayor and the new City Council members will work to renew the millage going forward. But that’s going to mean that they have to put some actual resources into educating the public about the NHIF and its benefits, or they’ll get the same result.”
It’s unclear whether New Orleans voters will get another chance to approve it, or whether December’s vote was the final word. The City Council could vote to place another proposition on a future ballot. But so far, no immediate plans have been announced.
December’s elections also significantly reshuffled the council’s composition, making it hard to predict. Five of the seven current council members are being replaced starting next month. And the councilwoman who led the charge to put the renewal on the ballot this year, Kristin Palmer, is one of the five incumbents being replaced.
Another factor is that next year, the city will try to get voters to approve a new property tax to raise $21 million a year for early childhood education. It’s a major policy priority for Cantrell. As she tries to convince voters to approve that tax increase, it’s unclear whether she’ll be willing to simultaneously fight for the housing renewal.
Future of NHIF
Even without the tax, the NHIF isn’t completely dead. While the property tax was its primary and most consistent source of revenue, it wasn’t the only one. A second major revenue source is nightly fees on short-term rentals dedicated to the fund. In 2019, the council raised those fees to $5 a night for residential units and $12 a night for commercial units.
It’s unclear just how much money the STR fees are raising. A July 2019 study commissioned by the city found that a $5 residential fee and $10 commercial fee would raise a combined $6.7 million a year. But since that study was produced, the COVID-19 pandemic has dealt a major blow to tourism, and tourism taxes and fees, in the city.
Andreanecia Morris, executive director of HousingNOLA, said that she hasn’t seen documentation showing that the city is properly remitting the STR fees into the NHIF. A Cantrell spokesman did not respond to a request for comment.
According to the city’s adopted 2022 budget, NHIF revenues are expected to drop from $12.9 million this year to $3.1 million next year. But the figures aren’t broken down any further by specific revenue source.The sole revenue source listed for “Neighborhood Housing Improvement” is simply the “Housing Improvement Fund.”
Questions about NHIF accounting and transparency played a central role in the recent election. Local government watchdog the Bureau of Governmental Research listed that as the central justification for opposing the housing tax renewal in a November report.
The report pointed to accounting inconsistencies from the city, as well as the city’s failure to provide key financial documents in response to public records requests. It also noted that Cantrell and the City Council appeared to be ignoring the established process for allocating NHIF funds.
Morris agreed with some of those critiques, and agreed there needs to be more accountability with the NHIF funds going forward.
“Everybody needs to hold themselves accountable to the process,” she said.
Still, she and many other housing advocates believe that the issue was blown out of proportion in December’s election.
Part of that outsized role is due to the vacuum left by the absence of a substantial support campaign. But Morris also argued that the focus on accountability was partially due to a deeply ingrained bias that makes people particularly suspicious of government spending on affordable housing.
She argued that similar issues can be found throughout city government, but that some people’s deep-seated association of affordable housing with corruption and crime put much greater scrutiny on housing programs.
“Why does housing get this fake purity test?” she said. “Please name for me a pot of money that’s perfectly managed.”
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