Even as President Barack Obama agrees to keep Bush-era tax cuts, a consensus is still lacking on an extension of tax credits needed to rebuild New Orleans’ Big Four housing developments, as well as  other Gulf Coast complexes.

Tucked away in the massive tax bill Obama is trying to pass in the last days of the current session of Congress –  before a new Republican majority takes over the U.S. House of Representatives –  are several affordable-housing incentives critical to the Gulf Coast and in particular, New Orleans. But while Obama has conceded to Republicans by agreeing to extend tax cuts for the wealthy if they agree to, among other things, extend emergency unemployment benefits, there is no word on whether the final bill will include the critical affordable housing incentives written into earlier versions.

Among its myriad tax code provisions, the bill under debate, S. 3793, proposes to extend a low-income housing tax credit exchange program for a year, reauthorize a New Markets Tax Credit program and fund a National Housing Trust Fund meant to pay for affordable rental housing in all states with a shortage, including Louisiana. Introduced by Senate Finance Committee Chairman Max Baucus (D-Mont.) in September, the bill has fallen victim to partisan haggling.  It still must be passed by the House and the Senate.

Most critically to New Orleans, the bill includes a two-year extension of the placed-in-service date for projects being financed with Gulf Opportunity  Zone tax credits created after Hurricane Katrina. Without the extension of the current placed-in-service deadline of Dec. 31, Louisiana stands to lose at least 1,770 units and $398 million in total investment dollars for projects that will not forward without more time, according to Louisiana Housing Finance Agency documents.  Another 3,230 units across 66 complexes are in jeopardy across the other Gulf Coast states.

Among the developers relying on the credits to finance post-Katrina housing projects are those building mixed-income communities on the site of the former B.W. Cooper and Lafitte public housing developments. At Lafitte, where 220 units are nearly complete, the failure to pass an extension could cost 430 still-unbuilt units financed through deals that rely on the tax credits and have not yet closed, according to the finance authority. For B.W. Cooper, the end of the tax credit program could kill the 410-unit project completely because none of its financing has closed and construction hasn’t started. Project developer KBK Enterprises did not return several calls made over the past week requesting comment. In September, company Chief Financial Officer Mike McCroskey told The Times-Picayune that the company was  “at the mercy of the federal government.”

Without the extension, Lafitte developers Providence Community Housing and Enterprise Community Partners, will have to come up with a way to replace the revenue projected to come from the GO-Zone tax credits.  Reached Tuesday, a spokeswoman for Providence reaffirmed the company’s commitment to completing the 650-unit project, with or without the credits.

“What I can say for today and for your upcoming story is that we are fully committed to building every unit at Lafitte as planned,” spokeswoman Andreanecia M. Morris said.

U.S. Department of Housing and Urban Development officials have said in the past the agency is also committed to completing Lafitte, with or without the credits, though HUD has not yet detailed where new money for the project would come from.

The scramble at Lafitte and B.W. Cooper comes after years of predictions of just such a crunch. Within months of Katrina, the Bush administration allocated $170 million in GO Zone credits to Louisiana. The state housing finance agency had barely begun to distribute the federal outlay when the national economy tanked, taking down with it the market for such credits.  As of Dec.1, $113 million out of the $170 million credits —

66 percent — were placed in service, helping to create 9,682 units and generate a total of $1.68 billion in total investment, according to the finance authority.

The finance authority projects that another $23.3 million in credits will be placed in service by the end of the month, creating another 1,563 units.

The expiration of the GO Zone credits will mean that the finance agency will have to reallocate $25.9 million in other tax credits and $87.9 million in Community Development Block Grants given to Go Zone projects, according to its records. After months of advocating for the extension in Washington, Louisiana Housing Finance Agency President Milton Bailey is cautiously optimistic that the extension will be passed in before the winter recess.

“We have received much support from our Louisiana delegation and positive feedback from both sides of the aisle,” he said. “However, in this uncertain environment, it is simply responsible for us to also make plans to proceed without these decisions being made in our favor.”

Louisiana Democratic Sen. Mary Landrieu has advocated loudly for the extension’s passage, telling colleagues on the hill that her vote on this matter depends on the inclusion of the Go Zone credits.

“Any compromise reached must have the important Go Zone tax credit extensions that are needed so desperately in Louisiana,” she said in a statement released Saturday. “If they are not included, construction that is under way will be shut down, costing 13,000 hard-working Louisianians their jobs and destroying the opportunity for thousands of families to get affordable, quality housing.”

While Landrieu’s Republican counterpart, Sen. David Vitter, supported the Go Zone credits when they were introduced, he has kept silent on the issue in recent weeks, instead choosing to focus his energy on a provision in a separate bill that he says would protect American taxpayers from “funding foreign bailouts”

The State Bond Commission voted today to issue ExxonMobil Corporation $12 million more in tax-free, low-interest bonds to finance an upgrade of the petro giant’s Baton Rouge facility.

The $12 million approved today comes on top of $300 million in Gulf Opportunity Zone bonds issued for the refinery in August. The company had requested $200 million.

The $312 million tax-free loan will create four permanent jobs and help retain 17 existing jobs, according to analysis submitted to the commission by attorneys for the corporation.

The tax-free government loan program, created in the wake of hurricanes Katrina and Rita, was intended to spur recovery in areas struggling to attract the investment needed to rebound from the storms. Though the state has to grant access to its specially issued borrowing power, taxpayers are in no way responsible for the loan if ExxonMobil does not make the necessary repayments.

Five years after the GO Zone bonds were created, and as the program approaches a Dec. 31, 2010 expiration date, the vast majority of the program’s money has flowed to businesses far from Katrina-devastated New Orleans. As of yesterday, the state had issued $6.1 billion and set aside another $1.6 billion for approved projects, leaving only $36.5 million still to be allocated. But of the $7.7 billion issued or approved, only $90 million – 1.1 percent of the total— went to New Orleans projects, according to the Industrial Development Board of the City of New Orleans, which is responsible for submitting bond applications to the state.

At least $2 billion went to oil and gas industry projects, according to available documents. (The number may increase when The Lens receives documentation it has requested showing all bonds issued or approved to date.)

In October, Bond Commission officials estimated that $700 million in projects were competing for the remaining bonds. The development board is not aware of any projects in the running that are in New Orleans, and none of the bonds so far issued for New Orleans projects went to development in hard-hit and still-struggling areas like the Lower 9th Ward or eastern New Orleans.

The analysis received by bond commission members in advance of today’s vote on the latest ExxonMobil bond appropriation said construction of the refinery would generate 2,904 temporary jobs, in addition to the 4 permanent jobs.

In 2009, the Texas-based oil company earned $442.85 billion in revenue, up almost 19 percent from 2007. The company also took in the biggest annual profit of any Fortune 500 company, earning $45.2 billion, according to the Associated Press.

Just a couple weeks ago, affordable-housing proponents had little hope that developments to replace the public-housing complexes torn down after the levee failures would materialize.

A damning federal assessment of the Housing Authority of New Orleans stated that, “Two of HANO’s Big Four the former Lafitte and B.W. Cooper projects mixed-income deals are in jeopardy. Lafitte and B.W. Cooper risk not moving forward as planned if Congress does not pass a Placed-in-Service extender bill in the immediate future.”

Such a move would give developers more time to close their deals and get their developments off the ground with the help of low income housing tax credits, which are due to expire at the end of this year. The U.S. Senate did just that as it passed the American Workers, State, and Business Relief Act, a $130 billion dollar bill known nationally for extending unemployment benefits. Locally it’s likely to be known for its provision to not only give Gulf states the much needed extension of the placed-in-service dates, but also lets the state exchange its tax credits for cash through the federal stimulus program.

“Without this bill, the critical housing reconstruction projects that are under way would be shut down,” said Sen. Mary Landrieu, D-La, who helped secure the measure in the bill.

Sen. David Vitter, R-La., did his part to secure the tax-credit exchange – considered a long shot by many.

“Allowing disaster housing credits to be exchanged, along with the two-year extension in the placed-in-service deadline, will allow much needed housing developments to move forward,” Vitter said in a press release.

Many housing advocates and elected officials had been pushing for the extension, which seemed like the most likely option open to Congress. However, the extension would have meant little if developers were not able to cash in their low-income housing tax credits. The tax credits waned and depreciated during the financial market crisis leaving the fate of developments such as the former Lafitte and B.W. projects looking futureless.

When the stimulus was passed, it allowed for low-income housing tax credits to be exchanged for cash due to the financial crisis. But in a discretionary move by Treasury Secretary Timothy Geithner, Gulf Opportunity Zone low-income housing tax credits were excluded. While a bipartisan Louisiana delegation – at both state and federal levels – pushed for the exchange, Geithner wouldn’t budge, leaving a legislative fix as the last recourse.

The Senate provisions still need to go through the House, and ultimately need President Barack Obama’s approval.

The state, particularly the Louisiana Housing Finance Agency, which administers the GO Zone tax credits, is optimistic.

“We are very pleased with this vote from the Senate,” said agency President Milton Bailey. “Louisiana and the other Gulf States were dealt dual blows: first by the hurricanes of 2005, and then by the recent economic crisis. The GO Zone tax credits are an integral part of the Gulf’s rebuilding efforts, but the landscape has changed since they were first instituted in 2006. We are very grateful that these needed changes were made so that we can continue our rebuilding efforts.”

Read Lens other coverage of this issue:

“Louisiana hit hard, but not among ‘hardest hit’” http://thelensnola.org/archives/3932

“Forgiveness as policy” http://thelensnola.org/archives/3560

“Judge sympathetic, but dismisses complaint about housing money shifted to port”  http://thelensnola.org/archives/3460

“Lens Transcript: Louisiana Housing Chief Milton Bailey” http://thelensnola.org/archives/2958

“BGR President: ‘Inaccurate’ to say too much affordable housing” http://thelensnola.org/archives/3055

Today the Greater New Orleans Community Data Center released the report “Housing Production Needs: Three Scenarios for New Orleans” where they explore the issue of just how much housing is needed now, and how much more may be needed in the future. What they found is that it’s extremely difficult to quantify the total supply of housing units under production right now due to poor tracking of housing construction, faulty technology and inconsistent data collection. It’s almost impossible for anyone to determine that there is too much affordable housing. However, the GNOCDC report has found that the New Orleans housing market has yet to provide affordable units for the vast majority of households making between $20,000 and $35,000 a year, and virtually no housing for those making less than $20,000 a year — together, roughly a quarter of New Orleans workforce.

The finding challenges statements made last month by Louisiana House Speaker Jim Tucker (R-Algiers) at a State Bond Commission hearing. Tucker says there is an overabundance of subsidized rental units and that the state should as a result put a moratorium on developing more subsidized housing until a complete review is done.
Echoes of the overabundance charge can be found in a report released by the Bureau of Government Research entitled The House that Uncle Sam Built: The Continued Expansion of Subsidized Housing in New Orleans, released in May. Within that report, BGR stated that by 2012 subsidized rental units would make up 25% of all housing, and that the number of units for very low-income households will be 22% higher than the amount available before the storm.  Though GNOCDC determined in today’s report that accounting for slow job and population growth, an additional 3,598 units will be needed by 2012 under current trends, Rep. Tucker and other state officials have used the BGR math to put in place a temporary moratorium on developing more affordable housing until further review of the housing stock is provided.

In Housing Production Needs, there are three scenarios examined to project what the demand will be for subsidized housing based off of future growth:

• a “status quo” future, where job and population growth track closely to where they are today
• a moderate growth future based off a projection of more jobs shifting to New Orleans, hence more households requiring affordable housing
• a best-case future where public policy strengthens social conditions paving the way for robust growth and population reaches pre-Katrina levels by 2020.

The report sees the “status quo” as the most likely scenario, with 15,523 new housing units needed by 2020, but if the “robust growth” scenario is met then 66,752 units will be needed. In any scenario, there will be roughly 10,000 units needed to accommodate New Orleans’ homeless population, which is double what it was before Hurricane Katrina. As for federally subsidized housing units already in the pipeline — in terms of housing created using low income housing tax credits, community development block grants, and Section 8 vouchers — there are approximately 7,754 units planned for completion in the near future. Many of those are pending that the placed-in-service dates for their completion will be extended and GO Zone LIHTCs can be exchanged for grants under the American Recovery and Reinvestment Act economic stimulus package. There are additional plans from the Housing Authority of New Orleans for 1,231 units (beyond those they’ve financed through LIHTCs), but no specific funding commitments have been identified for them. Another 1,400 units hope to be produced using LIHTCs and Section 8 vouchers but they also lack financing commitments from either private investors or bonds issued by the State Bond Commission.

The bottom-line on this report is that those who are homeless, are of very low-income and low-income households lack affordable housing today, and this number is certain to grow even in the limited “status quo” future. The idea that there is already an excess supply of affordable housing is wrong.

– Brentin Mock