Until bulldozers arrived this week, the multi-story building on Claiborne Avenue defiled an otherwise lively block adjacent to Central City’s newly redeveloped Harmony Oaks public housing project. Junkies, vagrants and homeless people had taken over what, before Hurricane Katrina, was a 30-unit residence for low-income tenants called Cornerstone Homes.
The property’s broken windows, open doors and shabby fencing stood in marked contrast to adjacent retail outlets and a fast-food drive-through. From the look of the derelict building, you might have thought Katrina just happened, but it’s been 13 years since the hurricane ravaged New Orleans.
Cornerstone Homes was operated by the Rev. Charles Southall III of First Emanuel Baptist Church. That it remained an uninhabitable eyesore despite the city’s aggressive efforts to remediate hurricane blight was testament to Southall’s ability to curry favor with powerful politicians and outmaneuver government bureaucracies.
The condition of Cornerstone Homes was no secret. Trimble Green, a regular at the boxing gym separated by a narrow alley from the abandoned building, said he could look out the gym window and see “the vagrants, homeless and drug addicts” next door.
Pastor Willie Bradford of the nearby Beulah Baptist Church tried to minister to the squatters but was more than a little concerned by the hazard they posed to the structure, to themselves and to the surrounding community. Elaborating on reports that a dead body had been retrieved from the building, Bradford said that in a separate incident a homeless man had set himself ablaze inside Cornerstone Homes. The pastor feared the whole place might burn down.
While plans for the property remain uncertain, nearby owners and tenants were encouraged by news that the building had finally been sold and was being demolished. Whatever lies ahead, it’s hard to imagine it will be any worse for them than the long decade of neglect.
“We are embarrassed and concerned,” Bradford said as bulldozers set to work. He ended on an upbeat note, saying he has faith “a new cycle of hope will come to make something better for the community.”
The vexing concern is why it took so long to get to this point.
Property rotted while Landrieu pushed war on blight
Amid much fanfare as he took office in early 2010, Mayor Mitch Landrieu announced that one of his top priorities would be eliminating blight — tearing down boarded-up houses, citing owners of overgrown lots, and returning viable but abandoned buildings to commerce.
Even before the post-Katrina crusade against blight, Southall had proved adept at tapping government programs that subsidize the costs of owning and repairing real estate. For 20 years, he had lined up tax credits and grants for Cornerstone and other properties — but failed to use them to keep properties up and running.
—Councilwoman Stacy Head.As Landrieu’s second term wound down, Southall had accrued more than $100,000 in liens and penalties on Cornerstone Homes, yet somehow evaded its seizure and sale at auction.
Southall is well-connected politically, and the officeholders he backs have been helpful. He delivered the benediction at Landrieu’s first inauguration and, as the mayor sought re-election in 2014, showered him with praise. “In those days Israel had no king; everyone did as they saw fit,” Southall intoned, taking a swipe at city leadership in the pre-Landrieu era. He praised the mayor for his “spirit of oneness,” adding that Landrieu “led with fire.”
And, indeed, in many parts of the city, Landrieu made good on his pledge to fight blight. Since 2011, the city’s Code Enforcement Department has inspected 81,466 units and held over 18,448 hearings. Some 3,985 units have been demolished during the Landrieu years, according to Landrieu spokesman Craig Belden.
But Councilwoman Stacy Head cited the relationship between Southall and the mayor as the reason for the lengthy failure to bring Cornerstone Homes to heel. “This was and must still be all about politics and power. Nothing else makes sense,” said Head, who has advocated aggressive enforcement of blight ordinances to revive derelict properties.
Head, who has been especially active in the redevelopment of Claiborne Avenue, took particular offense at the derelict condition of Cornerstone Homes, calling it a “hindrance to continued investment.” Over the years, she said, her staff returned from blight hearings to report that the property owner got breaks that average people didn’t.
Belden sharply denied — “absolutely not” — that political favoritism had figured in Southall’s immunity from enforcement.
Southall answered an inquiry from The Lens about the sale of the building, but he wouldn’t comment on his relationship with the mayor.
Southall got tax credits to fix up the building, but never did
Southall’s effort to secure government help with Cornerstone long preceded the Landrieu years at City Hall. As early as 2001, Southall landed a Low-Income Housing Tax Credit for the property — a federal subsidy to help finance improvements. The total tax credit was about $1.9 million distributed annually over 10 years, though it’s unclear how many years he took advantage of the credit.
In 2002, Cornerstone Homes, then still occupied, was granted $395,000 in funding through the federal HOME Investment Partnerships Program, City Council records show.
After the 2005 floods that followed Hurricane Katrina, Southall was back before government officials asking for disaster aid from FEMA, the U.S. Federal Emergency Management Agency, as well as an extension of the tax credits.
He portrayed the long-neglected property as a victim of Katrina, blaming his banker for running off with insurance money that could have gone into restoration.
And yet, a decade after securing the credits, Southall had not even submitted plans for rehabbing the property as required by law, according to a 2011 letter to the Internal Revenue Service from the Louisiana Housing Corporation, which oversees the Low-Income Housing Tax Credit program.
“They have mentioned recently, that they are waiting on some funding from the City of New Orleans, but could not produce any supporting documentation of such funding,” Ricky Patterson, a compliance supervisor for the state, told the IRS in an email at the time.
The following year, Patterson’s frustration grew. In a June 2012 email to staffers, he noted Cornerstone’s continuing failure “to provide any real viable proof of a funding mechanism and/or management mechanism to bring this project back online.”
Patterson went on: “I would be in support of someone else purchasing this building … I would not be in support of providing additional funds to Cornerstone Homes of New Orleans.”
The next month, Southall wrote a letter to Anthony Faciane, deputy director of the city’s Office of Community Development, “seeking financial relief and re-investment by the City of New Orleans back into this project.” Southall cited a tax credit allocation he had received in 1996 but made no mention of his noncompliance with IRS tax credit rules.
Months later, then-U.S. Sen. Mary Landrieu, the mayor’s sister, came to Southall’s defense. “I believe the Office of Community Development will find the application exemplary in every way and I would appreciate every appropriate consideration be given to the application,” she wrote in December 2012. State Sen. J.P. Morrell, D-New Orleans, also weighed in with a phone call on Southall’s behalf.
Asked for comment, Morrell said he was “supportive of the project in the context of giving him [Southall] more time to come into compliance.”
Property finally cited for blight
Another two years passed without progress, and even the city began to lose patience with Southall. “It appears that this building cannot be habitable in the near future without considerable repair to the property,” Winston Reid, the city’s deputy director of code enforcement, wrote in a letter to Don Hutchinson, executive director of the Louisiana Housing Finance Agency, now called the Louisiana Housing Corporation.
In December 2013, eight years after Katrina, a blight ruling was finally issued against the building — but to little avail.
A 2014 email exchange between Head and Jeremy Stevens, City Council liaison for code enforcement, revealed that even after a dead body had been found in an elevator shaft and Southall had been reported to the IRS for not following tax-credit rules, City Hall was still willing to work with him.
Stevens warned Head, “Further actions of abatement by Code Enforcement might prove to be counterproductive or a detriment to the property’s successful return to commerce.” If Southall failed to come up with a plan to fix up the property, he wrote, the city could hold a blight hearing, which could result in the property being sold at auction.
Meanwhile, Southall sought subsidies for other developments
Southall had made other attempts to add to his holdings of low-income rental housing supported by public subsidies.
With the Cornerstone project foundering, he set his sights on another potential source of funds. In August 2013 Southall asked the city for $750,000 through the federal HOME Investment Partnerships Program. Southall’s declared goal was to provide 49 units of affordable housing at various properties scattered across Central City.
He named the project First Emanuel, after his church. The award was made contingent on meeting the requirements of the Louisiana Housing Corporation as well as partnering with a proven development and management team. The timeline for securing funding was six months from the time of notification.
The properties were registered under various limited liability corporations that Southall directed. They ranged from blighted and unoccupied doubles to 1960s-era Section 8 apartment complexes. To date, most have accumulated code violations, tax liens or both.
In May 2013, the mayor called a high-ranking administrator at the Louisiana Housing Corporation, asking for an update on Southall’s holdings. Keith Cunningham, executive counsel for the Louisiana Housing Corporation, responded to Landrieu’s request by email, mentioning both Cornerstone and the First Emanuel project.
Cunningham did not mince words. “Mr. Southall has proved to be inaccurate or simply non-responsive despite our attempts to work with him,” he wrote, noting that the First Emanuel project had yet to show the agency a plan for bringing the properties into compliance. Cunningham went on to say that his office had received letters of support for Southall from the New Orleans Office of Community Development as well as various City Council members and other elected officials.
“At this time he has not been blacklisted by this Agency,” Cunningham wrote, “but … he will not be allowed an opportunity to participate in future funding rounds.”
It was downhill from there. In April 2015, a Southall-owned building at 1900 Amelia St. collapsed. It came as no surprise to neighbors who for years had complained about its blighted condition and the suspect activities of squatters who had taken over the apartments. Southall again sought federal money, this time to clear the site and put up affordable housing. But in May 2016 he sold the property to First NBC Bank, which subsequently failed for unrelated reasons.
The end of the road for Cornerstone
Last October, Southall seemed to give up on Cornerstone Homes as well. Or did he?
For $220,000 he sold the property to Kenner gas station owners Mashood Khan and investment partner Usman Javaid.
Responding to inquiries from The Lens, Southall recently said he had created a new nonprofit with Khan and Javaid. The Lens couldn’t find any mention of such an organization in state records. Javaid disputed Southall, saying First Emanuel’s pastor was out of the picture and that he and Khan would decide in a couple of months what to do with the property.
Days later, a team of workers was seen on the property, preparing it for demolition. That could erase the $108,000 lien for code violations, but it would also disqualify the new owner from securing the so-called gap funding from the Office of Community Development that Southall had been counting on to redevelop the property.
In addition to the blight liens of $108,000, the assessor’s website shows that property taxes for Cornerstone haven’t been paid since 2012, adding another $14,000 in liens.
Belden, the mayoral spokesman, confirmed that “when the property is demolished, all code violations will be abated and the lien will be reduced.”
He said the city wanted to achieve twin goals: getting the property “back into commerce” and working “with people to get affordable housing back on line.”
“This [new] owner did not cause the blight,” Belden said. “This owner purchased a blighted property and is redeveloping it.”
It remains to be seen if, 13 years after Katrina and eight years after Landrieu became mayor, those goals will now be realized.