Click here to download the report (pdf).

We believe this plan can have the following significant impact on the apartment industry:

• Higher demand for apartments as the dream of home ownership becomes more difficult.
• Financing costs will increase and some valuations decline as the government interest rate subsidy is phased out.
• New apartment financing sources will surface as “agency” lenders exit the market.

Every apartment owner needs to understand what is coming and the long range impact on our business.

J. Mark Madderra

Not included in these totals are approximately 1,081 units in 11 properties which have been allocated resources but are “sitting in limbo” as reported in the Times-Picayune (Sept. 19, 2010). The ability of these projects to move forward is dependent on a congressional extension of the “GO Zone” deadline which requires completion by the end of this year. A stripped down version of the extension bill has been attached to the 2011 Budget Bill. It has been passed by Congress and will be signed the President.

It is interesting to note that 830 (80%) of the 1,081 units which need the extension are tied to the redevelopment of two demolished housing projects, Lafitte and B.W. Cooper. Department of Housing and Urban Development (“HUD”), which plays a direct role in the redevelopment effort, has stated numerous times that it is committed to rebuilding this housing. While HUD would prefer a congressional extension it is likely that HUD will find the resources elsewhere if necessary. HUD has also announced plans to re-develop the 800 unit Iberville housing project and has selected a development group to begin the process. Iberville is important to the redevelopment of downtown. It is located adjacent to the French Quarter and has been overlooked as part of the transformation of public housing.

In summary, post Katrina affordable housing initiatives in Orleans Parish will result in approximately 8,000 new units with a total development cost of $1.6 billion. This represents 50% of the total spent statewide in the rebuilding effort. Any future developments of this type will be on a much smaller scale as the “GO Zone” resources allocated to produce this housing will be exhausted.

To be announced