The Gordon Plaza Apartments located in the historically troubled Agriculture Street community are scheduled to be auctioned off after the complex’s owner failed to make mortgage payments since Katrina.
The now-vacant development was owned by low-income housing nonprofit Desire Community Housing Corporation. The U.S. Housing and Urban Development Department-subsidized, 128-unit multifamily complex is scheduled to be auctioned on April 12.
The financial arrangement that put the complex in the hands of the housing corporation called for the apartments to become HUD’s responsibility if the housing corporation defaulted on its loan.
Edwin Shorty, the Desire group’s attorney, blamed a dispute with a contractor for tying up money that would have renovated the empty property and put it back in business – generating rent to pay the mortgage. The contractor, who’s since been arrested for theft and contract fraud, took $1.8 million but didn’t finish the work, Shorty said.
“[Desire] had the intent to rehabilitate the property and put it back in commerce, with the specific intent of providing low-income housing for the elderly,” Shorty said.
The private-practice attorney handling the foreclosure on HUD’s behalf, Roy Lilley, put it more succinctly.
“The hurricane got it,” he said. “They never repaired it.”
The federal government has a lien on the property for unpaid taxes. The Desire corporation will still be responsible for paying those back taxes even after the property is auctioned off, Lilley said. The bid package for the property can be found in this pdf and requires a $50,000 deposit to be considered.
Lilly says he’s handled these multifamily property foreclosures for HUD for 22 years. They used to happen every six months, but now have been occurring every three months.
“Some of them are in such poor conditions that no one wants to invest in rebuilding them,” Lilley said. “That may happen to this one, and if no one bids on it, that means HUD’s going to have to find some way to get rid of it.”
Like many structures around the city, the Gordon Plaza Apartments were finished off by the levee failures after Katrina. But long before the apartment building drowned and left abandoned, it was associated with another disaster.
The apartments are part of what once was a residential area that included the Gordon Plaza subdivision, the Press Park Townhomes and community center, and Moton Elementary School, all of which were built over a landfill that was used as a municipal dumping ground until the 1950s. It was reopened briefly in 1965 as a depository for storm refuse after Hurricane Betsy. In the 1970s, half of the landfill was covered and developed for housing.
However, lead, arsenic and other cancer-causing toxic chemicals were found in the soils below. The area was declared a Superfund site in 1994 and placed on the Environmental Protection Agency’s priority list for remediation.
But families weren’t satisfied with the EPA’s clean-up efforts, which involved scraping and replacing the topsoil. Residents wanted the federal government to buy them out of their homes.
An organization called the Concerned Citizens of Agriculture Street Landfill filed a class-action lawsuit against the city and the Housing Authority of New Orleans, who managed the public housing in the neighborhood, demanding relocation.
Judge Nadine Ramsey, who recently ran for mayor, ruled in the residents’ favor, but only after the Katrina relocated the families living there anyway. Still, the families won full fair market value for their homes, as well as $5,000 to $50,000 for emotional distress, depending on how long they lived there, though an appeals court later cut the distress awards in half.
The Bagneris Law Firm, which is handling the case, says on its Web site that a status conference will be held March 31 to determine how the claims will be managed, processed and evaluated for awards.
Shorty declined to comment on that lawsuit stating that it is “out of my client’s purview.”