As the housing market goes to complete sh*t, Gulf Opportunity (GO) Zone tax credits intended to spur housing development in the Gulf rapidly are losing value for investors, threatening to stall already precarious housing recovery in New Orleans and across the region.
Homeowners are not the only one at risk in our crashing housing market.Â Renters looking for affordable homes in redeveloping areas like New Orleans (and other urban areas seeing a complete shutdown of the last few years of affordable housing construction) face a serious shortage of housing opportunities.Â
Across the nation, affordable housing deals are crumbling as investors, hurt by the economic downturn, lose interest in purchasing tax credits and lenders pull out of projects. But nowhere is the situation worse than in Louisiana, where Congress created an extra $168 million in tax credits after Hurricanes Katrina and Rita — nearly 20 times the state’s regular annual allocation of tax credits — to spur the development of 27,000 affordable and mixed-income housing units. All of the Gulf Opportunity Zone tax credit projects must be ready for occupancy by the end of 2010, which means developers can’t afford to wait until the market improves for tax credits.Â Â
This further dampens the economic recovery of the city, as workers continue to be shut out of the area, and industries and sectors limp along without those necessary workers.Â On and on the cycle goes.Â
The rosy, mixed-income futures of those large former public housing sites that are alreadyÂ becoming zones of rubble?Â Not so promising either:
In the New Orleans area, about 31 of 77 projects have not yet closed on their financing, and may find it more difficult to make the numbers work. Those projects, including the replacements for the public housing developments that are being demolished, represent about 46 percent of the 9,779 units that are on the drawing board for the five parishes that make up the New Orleans area.Â
Congress is working on some corrective legislation, and,Â I’m thrilled to see, calling for HUD Secretary Jackson’s resignation.Â Â I know we’ve only got about 8 months to go of Bush et al., but maybe they could throw in some articles of impeachment with that resignation request.Â
Of course, Jackson’s more than welcome to take his $100,000 portrait home with him.Â He does deserve a souvenir of his important accomplishments of the last few years.Â
This spring, keep an eye out for abandoned construction projects and tent cities coming soon to your community!