American Can and the future of affordable housing in New Orleans

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New Orleans housing advocacy groups demand the owners of the American Can Company apartments halt evictions after low-income tenants there were told to leave their homes, with an end-of-2016 deadline.

Southeast Louisiana Legal Services (SLLS) and the Greater New Orleans Fair Housing Action Center (GNOFHAC), representing Michael Esnault, a Vietnam War veteran and tenant at the building for more than six years. and other tenants at the Mid-City apartment building, demand the owners extend the deadline and help ease affordability options for the dozens of tenants facing the loss of their housing.

More than 50 units at the American Can apartments on Orleans Avenue near Bayou St. John are designated for low- and middle-income tenants. Nearly $40 million in public funds, credits, grants and loans were used to build the apartments, including $29 million in tax-exempt bonds, $8.5 million in historic tax credits and $6.5 million in Community Development Block Grant (CDBG) funding.

The tax-exempt bond funding came with a requirement that at least 20 percent of the building's 268 apartments be for residents earning less than the area's median income. That requirement is expected to expire early next year, opening those apartments to the price of the owners' choosing.

Those funds were acquired by the building's previous owner, 3700 Orleans LLC, a subsidiary of Pres Kabacoff's HRI Properties. According to the letter, following the building's sale to ACV VII in 2013, any changes within five years of the closeout of federal CDBG assistance requires "reasonable notice" to tenants, as well as opportunity to comment on changes and consultation with the city over the property's use and "objectives of the CDBG program, including housing for low- and moderate-income people."

In a statement, GNOFAHC's executive director Cashuana Hill said the building's owners "should honor their promise to Louisiana taxpayers and cease these evictions."

“The low-income families we serve are being pushed out of their homes and priced out of their city,” said Hannah Adams, SLLS staff attorney. “They need to follow the rules if they want to change the property to luxury housing.”

The evictions also could be violating the Fair Housing Act, as the evictions are likely to lead to "a loss of housing opportunities that disproportionately burdens people with disabilities, families with children, and people of color," in violation of the Fair Housing Act. The groups add that "the evictions may also run afoul of regulations required of taxpayer-funded properties, including requirements to notify tenants of proposed changes, and to consider options for ongoing affordability based on resident input."

The groups demand the Georgia-based company "immediately cease issuing vacate notices and/or filing 'rules for possession' against low-income tenants with expired leases" as well as provide a 30-day extension on their leases while the parties reach an agreement, and that the company work with tenants, advocates and the city to discuss affordability options and a "more favorable move-out arrangement for tenants

ACV attorney Randy Opotowsky told WWL-TV that seven residents will lose their lease in January while the remaining low-income tenants' leases will be phased out.

New Orleans' subsidized housing market is likely to see similar evictions in the coming years as federal grant programs expire and property owners begin flipping previously "affordable" units to market rate and luxury apartments. Breonne DeDecker with Jane Place Neighborhood Sustainability Initiative told WWL-TV that "what's happening at the American Can we're going to see play out over and over again in coming next 10 to 15 years here in New Orleans."

About 1,200 subsidies are set to expire by 2021, and nearly 4,900 will expire by 2031. These expirations will effect more than 100 New Orleans housing developments, including apartment complexes in the CBD and more in Mid-City. Mid-City is soon to get another large-scale apartment development with the construction of a 382-unit apartment complex set just behind the American Can building on the Lafitte Greenway. That development will have a dozen affordably priced units as part of a "density bonus" allowing developers to build bigger than allowed under the area's zoning as long as they open units to lower-income residents. District B City Councilmember LaToya Cantrell proposed instead that developers instead chip $644,000 into a housing assistance fund to provide up to $46,000 to help with a down payment on a house for low-income families in the area; many housing advocates say that undermines the goal of creating more affordable units, particularly as mortgages still would be well out of range for most lower-income families.

More than half of New Orleans residents are renters, and according to the New Orleans Redevelopment Authority, rents have increased up to 25 percent over the past four years. Reports from the GNOFHAC show that more than half of all renters are rent-burdened, paying more than 30 percent of their income on rent and utilities. Eighty percent of people earning less than $15,000 a year spend more than half their income on rent.

Amid 2016's debates over low or stagnant wage growth, public housing, gentrification, and the future of Airbnb and short-term rentals in New Orleans neighborhoods, Mayor Mitch Landrieu pitched a five-year plan for affordable housing, promising to "build or preserve" 7,500 affordable housing units by 2021, with 4,000 units available by 2018, followed by an additional 3,500 units in the ensuing three years. The city plans to leverage city-owned land, reserve tax-adjudicated properties in "target neighborhoods," and increase its use of "priority bids" at sheriff's auctions and public sales.

Meanwhile, more than three-quarters of rental properties require major repairs for leaks, infestation, plumbing, mold and other issues. In 2017, the New Orleans City Council will likely consider an ordinance that requires landlords to be held accountable for substandard housing and to ensure rental units meet all basic health and safety requirements. The ordinance requires units be “registered, inspected and properly maintained, and that substandard conditions be identified and corrected.” Councilmembers Cantrell and Jason Williams introduced the measure this month. The Council's Community Development Committee will take it up in January.

Registration would be phased in throughout 2018 with full compliance by 2019. The ordinance also gives renters the ability to report violations without “fear of retaliation,” including eviction, protections that currently aren’t guaranteed in New Orleans.

See related PDF rentalregistry.pdf


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