New Desire Housing Project Rises from Devastation of Katrina
By Caitlin Jones & A. J. Johnson
6 min read
The resurrection of the New Desire HOPE VI public housing redevelopment is a monument to its residents, the Housing Authority of New Orleans (HANO), and the development and management companies that restored this community following the devastation caused by Hurricane Katrina.
Prior to Katrina, HANO had made plans to eliminate the old and dilapidated Desire public housing project, located in the Ninth Ward of New Orleans, and replace it with a new mixed-income housing community called New Desire. It received funding to do so under the HOPE VI public housing redevelopment program administered by the U.S. Department of Housing and Urban Development (HUD).
Desire, comprised of 262 barracks-style buildings with 1,800 units occupying 97 acres, was viewed as the most dangerous public housing project in the city. In 2003, it was entirely demolished except for two buildings, to make way for a new mixed-income residential community. The redevelopment plan for Desire Village called for development of 425 new rental single-family homes and duplexes in multiple phases and comprised of public housing, low-income, and market-rate rental units.
The developer, Michaels Development Company, based in Marlton, NJ, was well along in the redevelopment process when Hurricane Katrina hit New Orleans on August 29, 2005. It had completed construction and fully leased the 107 units in the two sections of New Desire Phase I (Treasure Village and Abundance Square), and was 40% finished with the second and final phase, called Savoy Place, which was to contain 318 units.
Hurricane Katrina swept through the site, causing severe flooding and such damage that the entire development had to be demolished, and rebuilt from the slab up.
New Phase Fully Occupied
“Insurance paid 100 percent of the loss and provided for the complete refunding of Phase I,” said Milton Pratt, Jr., senior vice president of Marlton, NJ-based Michaels Development Co., the developer of New Desire.
New Desire had originally been financed by equity generated by the 9% low-income housing tax credit, and by HOPE VI funds and other public and private dollars.
The total cost to rebuild Treasure/Abundance was $15,356,817, according to Pratt. Interstate Realty Management Company, the property management firm that manages New Desire. Interstate is a sister firm to Michaels Development Company.
Reconstruction of New Desire Phase I began in October 2006, and the 107 units were completed and made available for rent in December 2007. The units are now fully occupied. In June, Michaels Development reported that 74 former residents had returned.
In New Desire Phase I, 50% of the units are reserved for public housing-eligible residents earning 40% or less of the area median income (AMI), 40% for households at 60% or less of AMI, and 10% for market-rate renters.
Designed by the architectural firm of Torti Gallas & Partners, the new community features one- and two-story wood framed duplexes that reflect the architectural style of New Orleans, featuring raised porches, deep overhangs, iron railings, decorative brackets, trim and shutters, and other touches. Amenities include central air conditioning and heating, dishwashers and garbage disposals, cable and internet capability, washer/dryer hookups, and two management/ community facilities. A wide array of services are also provided or made available to residents.
Community on the Mend
“I’m starting to view significant progress as this community comes back to life,” E. James Henderson, Jr., president of Interstate Realty Management, told the Tax Credit Advisor recently. “You can see things starting to happen. A new baseball field has been opened for the children,” he said. “Elsewhere in the neighborhood, churches are reopening and homes are being rebuilt.”
Pratt, whose company has developed or rehabilitated more than 39,000 housing units, is pleased with New Desire. “It has been a model for our company in terms of how we go in and work with a community,” he said. “We started right [after Katrina] and made an absolute firm commitment that we were going to rebuild on that site”¦.Three years later, we’ve already rebuilt the first 107 units, are under construction for the next 158 units, and are about to make application for the final 158 units.”
Savoy Phase I, with 158 units, is under construction. A second and final Savoy Phase II, of another 158 units, will follow.
Karen Cato-Turner, executive director of HANO, described some of the lessons that have been learned. “Having had the experience of a disaster, we know that preparations need to be made upfront in addressing how we deal with our clients as well as how we deal with the lenders and insurance providers to make sure there are adequate dollars to rebuild in the event of a disaster,” she said. “I think we have indeed learned some lessons and are very equipped to address them.”
HANO Chairperson Diana J. Johnson added, “Our residents have come a long way. It’s been three long years,” she noted, “and many of them have been waiting to come home. Every day a family is returning home, and, yes, we do have a smile on our face – not only the housing authority staff, but the family and everyone in that community [that] is there to receive the family.”
“The resident sentiment has been mostly positive,” Kathleen Matthews, president of the New Desire Phase I residents’ council, told TCA. “Our challenge is to continually stay up to date on all the new laws and regulations on public housing. We are pleased with the support we are getting from HANO, but we still need continued education.”
Team Effort, Next Phase
Pratt said teamwork was the key to the resurrection of New Desire. “To succeed in a project like this, you have to get the very best from every team member. And by that I mean the housing authority, the Louisiana Housing Finance Authority, the city, the residents, and everyone else involved.”
He concluded, “Our type of housing is so important in New Orleans because it is so very much a service economy, and a lot of these people are low-wage earners and they need affordable housing that is acceptable and in a neighborhood that is easily accessible.”
Desire Phase I was recognized in June 2008 as one of the top low-income housing tax credit projects in the nation, winning the Charles Edson Tax Credit Excellence Award in the category of GO Zone Housing.
Savoy Phase I, now under construction, will have a total development cost of roughly $35.4 million. Pratt said funding sources will include:
- HANO Loans (HOPE VI & Capital Funds) $8,900,000
- Reinvested HANO development fee $655,900
- Equity from 4% LIHTC $12,706,452
- Permanent Debt – Series B Tax-Exempt Bonds $3,435,000
- Rental Income during Construction (phased lease-up) $815,700
- Additional HANO Loan $8,456,600
- Interest Income from Guaranteed Investment Contract $417,200
- Total $35,386,852
– James T. Berger
