(The Center Square) – The Louisiana State Bond Commission on Thursday approved nearly $38 million in revenue bonds to support two affordable housing projects in New Orleans.
The decision came with pointed questions about the high construction costs, with commission members calling the costs per unit “outrageous.”
Ultimately, the commission signed off on the Louisiana Housing Corp.’s request to issue up to $22 million in bonds for the 4100 Bywater project, a planned four-story development with 82 affordable units in the Bywater neighborhood.
The bonds, capped at 10% interest over 40 years, will help cover the project’s $35 million total cost.
Funding sources for the Bywater project include FEMA funds through the Housing Authority of New Orleans, support from the city’s Office of Community Development, and low-income housing tax credits.
The developer, ITEX Development, acknowledged the project costs exceed federal housing limits by more than $11 million, but identified more than $15 million in “incremental costs” to justify the overages.
The second financing request, for the Touro Shakespeare Project in Algiers, authorizes up to $16 million in revenue bonds to help redevelop the historic Touro Shakespeare Almshouse, a Depression-era facility that has been vacant since Hurricane Katrina.
The plan calls for converting the three-story structure into a 52-unit affordable housing complex for seniors, complete with on-site management, community space in a renovated chapel, and courtyards.
That project’s total development cost is $32 million. Funding includes federal disaster recovery dollars, city loans, historic tax credits, and low-income housing tax credits. Developer HRI Properties noted that the project must close its federal community development block grant funding by year’s end.
The steep price tag for the Algiers project drew sharp criticism from some commissioners. Rep. Tony Bacala, R-Praireville, questioned whether the Touro project “passes the smell test.”
“I understand there are a lot of costs involved with the broader project, but providing somebody with 756 square feet of living area at a total cost of $622,000 per unit – I can’t get past that,” Bacala said.
He urged the commission to require housing corporation officials to testify directly at future meetings about how such projects are evaluated and recommended.
Developers and their representatives defended the costs, citing the building’s severe structural damage, asbestos contamination, and the requirements of federal historic preservation standards.
“We knew this was going to be a very expensive project,” said Josh Collen, leader of the project. “So we wanted to have the due diligence to be able to look you all in the eyes and say that we’ve done our jobs as developers, as stewards of neighborhood and of historic renovation. The condition we found it in … was one where the structure had collapsed due to water intrusion. The building had a ton of asbestos throughout, and when you have asbestos mixed with debris, everything is contaminated from the perspective of environmental remediation.”
Paul Rainwater, a consultant assisting with the project, added that redeveloping the long-vacant site was critical for the Algiers neighborhood.
“Having this dilapidated building across the street from the Marine Corps Reserve Command and Delgado Community College does not make any sense whatsoever,” he told commissioners.
Sen. Mike Reese, R-DeQuincy, agreed with Rainwater, saying the Marine Corps was promised that the state would pursue economic development in the surrounding area but that had yet to be fulfilled.
“Fifteen years ago we promised the Corps a redevelopment of that entire region in order to get that headquarters, which is probably about 800- to $900 million a year in annual economic impact to our state,” Reece said, objecting to a motion to defer the project until the next meeting. “We told them, within a couple of years, we would revitalize that region, and it would look completely different, and just have faith and confidence in the state that we would make those investments.”
Despite concerns, the Bond Commission voted to approve both items, allowing the Louisiana Housing Corp. to move forward with bond issuance. Morris and Bacala voted against the approval.
