On the Louisiana Housing Corporation & Affordability Periods

With over 1,000 affordable housing units in New Orleans set to expire in coming years, it is time that we shine a critical light on the Louisiana Housing Corporation (LHC) and the pivotal role that the agency can, and should, play in preserving affordable housing in Louisiana. This agency is responsible for administration of the largest federal funding source for low-income housing in the nation, and in a state currently in the midst of an affordability crisis, we need them working with, and not against, us.

First, we will offer a brief explanation of the function of the Louisiana Housing Corporation.

In 1987, the department of Housing and Urban Development (HUD) created the Low-Income Housing Tax Credit (LIHTC) program to spur the development of affordable housing throughout the country. The program provides tax incentives to developers to encourage investment in affordable housing. From 1987 to 2006 the program accounted for approximately one-third of all new multifamily rental housing.[1] Needless to say, it has become an essential incentivizer for private development of affordable housing in the US. Each year, HUD allocates a finite amount of LIHTC to each state’s Housing Finance Agency (HFA). This agency is then responsible for designing a rubric-type document by which to allocate the credits to developers; this document is called the Qualified Allocation Plan (QAP). QAPs award points to developers based on complex criteria, and the proposals with the most points get the most credits. These criteria are meant to distribute credits in a manner that deliberately reduces racial segregation, per the national Fair Housing Act. There are certain HUD-mandated requirements that are in every state’s QAP, but the essential details are decided state-by-state. For example, it is in this process of distribution that the state agency determines how seriously it will prioritize extended affordability.

All developments are subject to an initial 15-year affordability compliance period, but the HFA determines to what degree it will incentivize extended affordability. In this year’s QAP, the Louisiana Housing Corporation offers 2 points for an agreement to maintain affordability for an additional 25 years. Idaho’s QAP, for example, offers 15 points for the same extended affordability agreement.[2] GNOHA offered many suggestions to the LHC regarding methods of incentivizing extended affordability, and penalizing early termination of affordability periods, none of which were ultimately included.

In New Orleans, we are currently being faced with the loss of approximately 1,200 affordable units by 2021, and 5,000 more by 2031, due to the expiration of affordability periods.[3] Many developers agree to extended affordability but sell the property through the qualified contract process before the extended affordability period is complete. LHC has the power to discourage this practice through the QAP, but has not done so. LHC also has the ability to force developers unwilling to comply with extended affordability to sell their property to a developer that will, and if they are unable to find a buyer, maintain affordability for an additional three years. This tool also has not been utilized.

It is also worth noting that the LHC did not release a QAP in 2016, postponing funding for nearly a year and a half at a time when the state was in crisis due to flooding events in the Baton Rouge Area and deeply in need of funding for housing. This lack of coordination and synchronization in the deployment of much needed resources in a time of crisis and disaster recovery must be addressed seriously and urgently.  State agencies entrusted with the disbursement of such resources must demonstrate the capacity and wherewithal to effectively manage this process or jeopardize the loss of federal housing funding so desperately needed by our citizens.

In an effort to publicly share the workings of this opaque agency, our organization attends all monthly LHC board meetings and “live-tweets” updates. This effort requires contending with the infrequent public notice policy, and regular last minute rescheduling of meetings. It also requires listening to the combative interactions of board members, one of whom was once quoted as saying “it is a misnomer that we need more affordable housing.”[4] These examples demonstrate the basis of our concern that a state agency, tasked with the creation of affordable housing in a state that is in the midst of an affordable housing crisis, is failing to fulfill its mission.

As a national spotlight has recently been shone on the racial segregation bolstered by LIHTC developments in areas such as Houston,[5] we hope to draw attention to the negligence at play in Louisiana. In New Orleans, as we struggle to fight the affordability crisis which we face, we need the LHC to work with us in their promised mission to provide access to affordable housing for all in Louisiana.  We urge other concerned citizens to join us in regulating the LHC and let them know that are watching, and that Louisiana deserves better.

[1] https://www.huduser.gov/publications/pdf/what_happens_lihtc_v2.pdf.

[2] https://www.idahohousing.com/documents/2017-qap-final.pdf.

[3] http://www.theadvocate.com/new_orleans/news/article_783b8db0-5cfa-11e7-af3a-a7a17adbef31.html.

[4] http://thelensnola.org/2009/11/13/the-public-cost-of-eviction/.

[5] https://www.nytimes.com/2017/07/02/us/federal-housing-assistance-urban-racial-divides.html?_r=0.

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