By Karen Gadbois – staff writer – State and city redevelopment authorities have suspended a program to sell Road Home properties until New Orleans permit officials resolve a problem that has thwarted would-be renovators by requiring costly home elevations.

Dozens of property closings across the city are on hold while the matter is resolved. It’s unclear how many of the 80 recent buyers already have run into the unexpected buzz saw of the city’s bureaucracy.

The cost of a home elevation – generally between $50,000 and $100,000 – easily can put a renovation project out of reach for buyers not expecting the cost. Recent buyers have the added stress of facing a nine-month deadline to get the house finished and occupied, according to a standard provision in Road Home sales. If that’s not met, the property reverts to the local development agency – a situation that both buyer and seller would prefer to avoid.

Three bureaucratic agencies stand between the pre-Katrina property owner and a prospective renovator:

• The Louisiana Land Trust, which runs the Road Home program, bought the property from the homeowners who chose Option 1.
• That state group took the New Orleans properties and put them in the hands of the New Orleans Redevelopment Authority, which handles the sales locally.
• The city’s Department of Safety and Permits then has to give its approval for the new homeowner to start renovations.

Frustrated homeowners say that NORA never disclosed the elevation requirement. But NORA officials said they weren’t aware of that problem – or that the properties were being treated any differently than any other damaged home in the city.

NORA now has about 50 property closings on hold until the issue is solved, spokesman Steve Majors said. He said the agency has been aware of the issue for about six months.

The problem turns on the small but legally divisive words “or” and “and.”

For most houses in the city, a renovator has to elevate the structure to what’s called base-flood elevation unless they can meet one of two provisions: that the house was less than 50 percent damaged in the aftermath of Katrina, or that the value of the renovations was less than half of the house’s pre-storm value.

But for the properties bought from NORA, city permitting officials were requiring that property owners meet both provisions.

City Safety and Permits Director Paul May said he’s drafting a policy memo that will direct his department to treat Road Home properties the same as any other in the city. He said it would be issued “soon” but wasn’t more specific.

The double standard caught seasoned developer Erich Weishaupt by surprise – especially since he’d already redone a house bought from a private seller on the same block without this hassle.

The Mid-City contactor has purchased and renovated more than 10 homes since 2006, but he said the two he recently bought through NORA have been by far the most difficult to bring back on line.

Instead of getting a permit, he said he was told he had to elevate the house and that no grant programs were available for this costly procedure.  Money would have been available to the original homeowner, but these options disappeared upon sale.

A flurry of e-mails between Weishaupt and the manager of the Louisiana Land Trust program, Louis Lumpkins, and other project managers at NORA reveal the agency’s efforts to assist him in getting the much-needed permits.

After a few weeks of wrangling and a call to his City Councilwoman, Shelly Midura, he eventually met both provisions the city was asking for, and he got the building permit he had been so desperately seeking. He is now renovating both properties.

Small developer M.J. Sauer has found herself in a similar predicament

“I don’t see why these properties are treated differently,” she said.

Her property had a damage assessment of just more than 50 percent – 53 percent. If she purchased the property on the open market, she would have had the option of challenging the accuracy of the assessment. No such options exist for Road Home properties.

She said the city told her to raise the home by 4 inches.

Louisiana Land Trust Executive Director Mike Taylor told Fox 8 on Tuesday that “until we get a full understanding of what is happening we are not transferring properties for rehabilitation.”

He said the agency is hoping a resolution can be found, but he is looking for solutions for those owners caught in this gap.

Those solutions may include asking the U.S. Housing and Urban Development Department to get involved and demolish the houses.

Another recent homebuyer is struggling with what to do.  Jeralyn Thomas of eastern New Orleans received a letter from NORA offering her the modest bungalow next door to her home on Sherwood Drive.

She could have asked NORA to demolish the property before buying the lot for $13,000. But she thought she could renovate the house, so she bought the parcel and structure for $24,000 in December.

She hoped to move her daughter’s family into the house, reuniting them in the neighborhood where Thomas has lived for 20 years.

Thomas, a nurse, decided to hire a licensed contractor familiar with permitting procedures to navigate City Hall.

Her contractor, Dent Hunter, has renovated more than 20 homes post-Katrina.

He was taken aback when Safety and Permit officials said the house had to be elevated one foot – at least a $50,000 proposition for this house that was built on a slab, even with the ground.

Dent said a City Hall employee told him that a group of 12 to 17 properties were going to be issued a special exemption and allowed to get a permit. But so far, he’s had no success.

With the nine-month deadline counting down to September, she fears she will not only be unable to renovate, but may risk losing her investment if NORA takes back the property.