The New Orleans Affordable Housing Crisis Worsens, Thanks to the Credit Crunch

Finally, an aspect of the credit crunch that we can all understand. It's simple: the (non) recession is killing the market for tax credits, so the much-bragged-about GO Zone credits to help rebuild, among other things, affordable housing devastated by the federal flood in New Orleans are selling at a deep discount. Result, according to the Times-Picayune: developers of such housing are having a much more difficult time getting their projects financed, and, though the paper doesn't say it explicitly, that means the evacuees get to stay where they got dumped almost three years ago.

This was supposed to be the market-driven solution to the affordable-housing crisis in New Orleans, and the market has decided that New Orleans (and its diasporated thousands) can wait until the fake valuations have been squeezed out of the exotic mortgage securitization "products." That's what markets do, apparently. What is it that governments do?

Comments

[wecouldbefamous]

Nagin's "free market" recovery minus a market equals zero recovery.

Let us not forget another of the city's shameful responses to the affordable housing crisis: raze salvageable public housing units in accordance with Alfonso Jackson's corrupt parameters.

Check out Nola Blogosphere coverage of that sad debate at wecouldbefamous.blogspot.com or at thinknola.com or at new orleans indy media...

[PioneerKing]

Larry, thank your friends the Clintons, a weak democratic party and the republican for this mess. The changes in lending/banking laws began to be eroded under President Regan, continued under G.H. Bush and were exacerbated under Bill Clinton. Regrettably, Sen. Clinton decided that she would continue to support such imprudent and draconian measures. If you really want to know why the republicans have praised Sen. Clinton for reaching across the isle - it's because she has voted like a republican on a host of issues to the detriment of the American public's best interest.
Please, just check her voting records. You should start with No Child Left Behind which has also had a profound impact on the rebuilding of the social fabric of New Orleans.
http://www.senate.gov/legislative/LIS/roll_call_lists/roll_call_vote_cfm.cfm?congress=107&session=1&vote=00371

Once you've had a good look at Sen. Clinton's voting records. Please, let America know from, where does the wealth of experience that Sen. Clinton purports to draw from, show that she has made good judgements.

[esquire07]

If there were Oil wells for the Bush and Cheney families to squeeze a nickel out of in New Orleans, you can bet the people of the devastated city would be in a much better place.

Instead, Bush bankripted the nation - both financially and Morally - lied to America and the World and invaded a Nation that posed no threat. Criminal.

Meanwhile - Tax Paying Americans in New Orleans suffer while there hard earned tax dollars are shipped off to Iraq - and ultimately in the pockets of the Oil and Arms dealers.

Disgusting.

[StephenJK]

New Orleans is now becoming victim a second time. However the perp is a little different now. Instead of mother nature, its the effing banking industry which is screwing NO. Except now, NO isn't alone. The country, no, the world is feeling the wrath of "magic money" and the monster credit crunch it created.

So what can we do? Bail out these bad loans? I think that's a bad idea. However, it might be prudent to look at individual cases and help on a case by case basis. THAT's a lot of work.

New Orleans is a much, MUCH bigger problem. The unsalvagable needs to be razed and affordable housing and condos need to go up. But, before that happens we need some good German or Dutch levee engineering to make sure something like Katrina doesn't happen ever again. AT ANY COST reliable and dependable infrastructure related to the protection from water for New Orleans (and anywhere else for that matter) needs to be put in place before reconstruction of the housing market down there begins.

[StephenJK]

I agree that slow response, inadequate planning, dragging of their feet and obvious engineering mistakes all play a part, Harry. I'm aware that there are still whole districts which are abandoned down in NO. There is just SO much that is wrong down there. Basically a metropolis has been refugeed to other places in the country. I also realize that NO was their home, perhaps for generations.

There is a much larger problem in the US: magic money. Money in 6 figures was lent to people that lenders KNEW would have a tough time paying back when the REAL shit hit the fan. Like when the ARM blows up to 16% or whatever these filthy loans do. Where was this "money" coming from that was being lended out to everyone and their grandmother who wanted a house? Who was backing it? WHAT was backing it? NOTHING. NO ONE.

I think the 80's dereg'ing of the money industries created this Holy mess we are in now. I could be wrong. Now as someone who has never owned a home I won't be able to get a loan because lenders are scared shitless to lend money. All because no one was watching these morons throw "cash" around like it was confetti. Some one with half a brain needs to be watching these idiots when they are lending money.

[jimpryor99]

Better question. What is it that YOU do? Oh wait, you make funny voices on TV. Never mind. I guess that's why we should listen to you.

[dadw5boys]

YEAH, BROWNIE DID A FINE JOB !!!!!!!!!!!!!!!!!

[eladora]

I was in New Orleans a while back and was sickened by the lack of re-building. Those trailers still set up in homes front yards . What the hell is wrong with our government from HUD to FEMA to not have this fixed. We have allowed our govt to piss on people and take so long that the news cycles leave them behind too. We saw a school that was NOT in a flood zone but in a lower economic area that had boarded up windows and it was an open operating school . What and why dont people just stand up and start screaming about the failure of govt.? Why arent we rallying in each of our states and contacting our Senators every single day about issues? We have time to blog but we need to channel this to news media emails and our Congressional reps.

[dadw5boys]

Well if you house was damaged by the wind the Insurace company will not cover it only water damage. If you home was damaged by water they will claim you needed Hurricane Insurance for wind damage.
The Hurricane did not hit New Orleans.de­ad center.

The water that damaged homes was wind driven.
BUT IT WAS STILL WATER!!!!!!!!

Insurance Companies getting away with fraud in my book.

[Mormondude]

Most evacuees have no intention of returning, credit crunch or not.
HARRY INQUIRES; And you know that how? Have they deputized you to speak for them?

[Mormondude]

I went to clean up Slidell in the aftermath. The people I spoke to then told me that many of their neighbors and family members had written off their homes and lives there as a total loss and were starting anew. And back here in Houston we saw tens of thousands of people move here. A good friend of mine owns a large apartment complex, and had many refugees move in. Once the government rental money ran out most of them left Houston, and very few of them were headed back to Louisiana. So based on my experience there and here, that's my personal observation. Take it with a grain of salt if you wish, but I think the possibility that people simply do not intend to return to Louisiana deserves consideration in designing public policy.

[doctorj2u]

It was idiotic to have a "market driven" recovery to begin with. In so many words the president was telling us "You are on your own suckers!". Thanks for nothing Mr. Bush.

[stevekarp]

Yes, we ARE on our own. I don't want paternalistic government to take care of me. That's my responsibility.
HARRY ASKS: And when, as in New Orleans, government mis- or mal-feasance results in the near-drowning of your city, whose responsibility is that?

[Henry]

Steve:

[doctorj2u]

Steve, as long as I have to send $1000 a week to this government, I want a government that works. I want a government that can protect its citizens with REAL levees and a government that can react quickly when Americans are in peril. I also want a government that doesn't demand 20% up front payment from totally devastated communites before any aid can be given. We are spending $5000 a second in Iraq. How about fixing communities inhabited by tax paying Americans first.

[L4TRUTH]

You guys have got to wake up and stop letting the media think for you!

[LizM]

Are they still inviting disaster, not to mention being criminally negligent, by rebuilding in the lower ninth ward?
HARRY ANSWERS: There is some very scattered rebuilding going on in the Lower 9, though more intensive rebuilding is happening in the Holy Cross neighborhood.

[LizM]

I know you know where I was going with that...I'm just getting tired of sounding like another broken record, and a bad one at that! How vulnerable is the Holy Cross neighborhood, vis-a-vis the effects of coastal erosion and loss of wetland protection?

[luziannagirl]

LizM

Lots of the Holy Cross neighborhood had only a few ft of water, and some of it didn't flood at all. Three of the challenges in rebuilding and repopulating that neighborhood are:

1) A large percentage of the residents were renters, some of them for generations, and post-storm rebuilding aid to landlords is much less (any at all?) than to homeowners

2) Many if not most of the homeowners are working poor and middle class, and do not have the ready cash reserves to initiate rebuilding and repairs out of their own pockets.

3) It's an historic neighborhood of wooden frame cottages, many of which were already in poor repair before the storm, and so needs lots of expensive work to bring back.

Some of the more affluent neighborhoods that are coming back fairly strong received several feet more floodwater than Holy Cross and parts of the 9th Ward, but have the personal financial resources and the ability to mount an effective public advocacy.

It's my feeling that it makes more sense to rebuild Holy Cross and much of the 9th Ward than it does some of the other parts of the city that got as much as 12 feet of water. But that's just me...

For a nice view of current goings on in New Orleans and a look at an ongoing 9th Ward renovation project, check out the current season of PBS' "This Old House" home renovation show.

[StephenJK]

Ummmm, Harry, just to let you know: The entire country is feeling these pressures. Just saying, friend.
HARRY RESPONDS: When the entire country has had perhaps half its rental housing stock destroyed by malfeasance of a federal agency, please be sure to let me know.

[azureblue]

Ummmm Steve, just to let you know, it was Bush who is responsible for the flooding of New Orleans. Bush was warned about the weak & deteriorating levees, and there was a repair program in place & operating, but Bush took the money from that program to cover tax breaks for his rich friends. The ACOE pleaded for years about needing the money, but Bush repeatedly cut the money to as little as one fifth of what was needed. Bush stopped repair work in progress on the very levees that broke. Bush broke it, and he should fix it.

[stevekarp]

Yes, and I have a hang-nail and it's George's fault too, I suppose?

[stevekarp]

And where is all your documentation for these wild assertions? This reason # 87 of "Why I am no longer a Liberal!": revisionist history.

[Steve]

Depends upon what you mean by "reponsible", I suppose.

President Bush, of course, as the leader of the nation (oh, please, stop laughing back there, I'm trying to make a serious point), is responsible for anything that the government does or doesn't do "on his watch", to use the vernacular expression. He and his government should do whatever it takes to "make New Orleans whole".

I'm not discounting the fact that funding was cut for flood protection repair, etc., by a notoriously penurious administration (when it comes to projects which have a benefit to the middle class and the poor, as opposed to the wealthy) -- that certainly would not surprise me in the slightest, but levees and floodwalls were not built in one administration. The impetus for the project goes back 40 years to the Johnson Administration and the Army Corps of Engineers and its culture of incompetence spans administrations as well.

For instance, this New York Times article

http://www.nytimes.com/2006/05/30/science/30storm.html

points out that the Corps's "standard project hurricane", the specification to which the flood protection *should* have been built, was woefully out of date and in most of its characteristics significantly below what Ma Nature could actually deliver, resulting in a design that, even if properly constructed, probably would not withstand a significant storm.

In engineering there's a saying "Better, sooner, cheaper: pick two". Unfortunately, we expect all three and, in the process, end up with none.