That's a lot of unused property sitting around in our little boomtown

Roughly 20,000 flooded New Orleans homes are still in one or another sort of Road Home limbo.

The state is keenly aware that many people haven’t honored their Road Home covenants, though its Office of Community Development is still trying to assess the scope of the problem. The problem is most acute in New Orleans, according to the department’s research.

In its most recent weekly report, the office estimated that 4,678 Road Home properties in the city were “not likely to rebuild.” That’s 70 percent of the statewide total in that category.

The state labels another 16,982 properties in Orleans Parish as “likely rebuild” and 456 as “unknown.” OCD director Pat Forbes said he’s confident most properties in the first category are in compliance; many homeowners just haven’t filled out all the necessary paperwork. It’s less clear what lands a property in the “unknown” category, and whether those properties will end up being fixed.

The reasons for this are complicated. In many cases, Road Home grants got swallowed up by fraudulent contractors and predatory bankers. Some homeowners are still trying to rebuild but overwhelmed by the shifting challenges and hidden costs of the process.  In other cases, homeowners just gave up.

It's now up to the state to recover grant funds or take over more properties.

The glut of blighted Road Home properties in New Orleans is a problem that arguably belongs to the state as much as to the city. If a homeowner doesn’t rebuild, the state is on the hook to pay the money the owner received back to the federal government, whether or not it can be recouped from the homeowner.

That setup, some observers have noted, could put the city and state at cross-purposes. For the state, every home deemed noncompliant represents a major headache, and possibly a cost. Determining that a homeowner met his obligations makes the state’s problem go away.

The city, conversely, has an interest in determining that every homeowner is held to the full extent of the covenants. Otherwise, the blight is the city’s mess to clean up.

In addition to blight, the city is sure to find itself holding the title to more and more land at a time when the rising costs of housing is dominating the news.  What are they planning to do with all that potential supply?  Maybe nothing.

Councilman James Gray led the charge, pressing Executive Director Jeff Hebert, on why the authority hasn’t auctioned more than a handful of lots in the Lower 9th Ward.

“What are your plans right now for the 600 to 700 properties you hold in the Lower 9?” Gray asked. He represents that area and eastern New Orleans.

Hebert responded curtly: “Cut the grass.”

Hebert said his agency is using the same techniques as other cities facing blight caused by depopulation. The problem, he said, is that there’s simply a glut of properties with low market values.

“NORA does not expect it will ever sell all the property it owns in the Lower 9th Ward,” he said.
Lots in Lakeview, on the other hand, have been auctioned for more than $100,000, he said.

Hebert said that the agency has auctioned only five properties in the Lower 9th Ward. Without much interest from buyers, the agency needs to explore alternative land uses such as the Raingarden pilot program, which encourages the creation of gardens that absorb water runoff before it goes into storm drains.

The New Orleans Redevelopment Authority handles the sales, maintenance and planning for commercial and residential properties in New Orleans as well as the disposition of Road Home properties.

It’s budgeted to receive $2 million from the city in 2014, all of which comes from the U.S. Department of Housing and Urban Development. That’s an increase from $1 million this year. The city provides no general-fund money for the agency.

Gray persisted in his questioning until Council President Jackie Clarkson interrupted him, saying that with the packed agenda Monday afternoon, a council committee meeting would be a better venue for his questions.

Probably not so easy to sell in the Lower 9. But when Jackie the realtor is pleased with NORA, you do have to wonder if they're really doing all they can to loosen up the market a bit.