Government & Politics

Louisiana hit hard, but not among the "hardest hit"

Today, President Barack Obama announced $1.5 billion for the “hardest hit housing markets,” money that will go to state housing-finance agencies to help foreclosure and declining housing price chaos.

Though foreclosures are the main focus, the money may also be used for sustainable and affordable homeownership.

Louisiana likely won’t benefit much from the plan. The money is  reported to target five states — Arizona, California, Florida, Michigan and Nevada — all of which were stung hard by foreclosures. Louisiana, and New Orleans in particular, of course has not suffered the same way from the foreclosure crisis, but the state is having a difficult time replacing housing lost from the levee disasters due to the capital market crisis.

An assessment of the Housing Authority of New Orleans released Thursday noted that redevelopment of public housing projects such as the former Lafitte and B.W. Cooper sites are at risk due to lack of capital investment. Federal money for those complexes will be returned to Washington if those redevelopments aren’t placed in service by the end of this year.

State officials are working to have Congress extend the deadline once more. They also want permission to let developers cash in their remaining Gulf Opportunity Zone tax credits through the federal stimulus program. Inclusion in the latter program would help fill the financing gaps that have stalled housing redevelopment.

However, the Obama administration has given no indication that it will bail out Louisiana by way of any of these programs — even though the foreclosure and capital market crises tend to dovetail. In other words, the housing crashes in Arizona, California, Florida, Michigan and Nevada have slowed housing restoration in hurricane-ravaged Louisiana and Mississippi.

“These are the states that started the cascade which led to the mortgage foreclosure crisis,” says Milton Bailey, president of the Louisiana Housing Finance Agency. “Louisiana may be a year or two behind this curve. That said, it is a shame that the Obama administration is still taking a hard line on the [stimulus] exchange and placed-in-service extension when the Gulf states are suffering from the capital market meltdown, which can be traced to the mortgage crisis precipitated by the five states which will benefit from this new  program.”

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