Even as President Barack Obama agrees to keep Bush-era tax cuts, a consensus is still lacking on an extension of tax credits needed to rebuild New Orleans' Big Four housing developments, as well as other Gulf Coast complexes.
Tucked away in the massive tax bill Obama is trying to pass in the last days of the current session of Congress -- before a new Republican majority takes over the U.S. House of Representatives -- are several affordable-housing incentives critical to the Gulf Coast and in particular New Orleans. But while Obama has conceded to Republicans by agreeing to extend tax cuts for the wealthy if they agree to, among other things, extend emergency unemployment benefits, there is no word on whether the final bill will include the critical affordable housing incentives written into earlier versions.
Among its myriad tax code provisions, the bill under debate, S. 3793, proposes to extend a low-income housing tax credit exchange program for a year, reauthorize a New Markets Tax Credit program and fund a National Housing Trust Fund meant to pay for affordable rental housing in all states with a shortage, including Louisiana. Introduced by Senate Finance Committee Chairman Max Baucus (D-Mont.) in September, the bill has fallen victim to partisan haggling. It still must be passed by the House and the Senate.
Most critically to New Orleans, the bill includes a two-year extension of the placed-in-service date for projects being financed with Gulf Opportunity Zone tax credits created after Hurricane Katrina. Without the extension of the current placed-in-service deadline of Dec. 31, Louisiana stands to lose at least 1,770 units and $398 million in total investment dollars for projects that will not forward without more time, according to Louisiana Housing Finance Agency documents. Another 3,230 units across 66 complexes are in jeopardy across the other Gulf Coast states.
Among the developers relying on the credits to finance post-Katrina housing projects are those building mixed-income communities on the site of the former B.W. Cooper and Lafitte public housing developments. At Lafitte, where 220 units are nearly complete, the failure to pass an extension could cost 430 still-unbuilt units financed through deals that rely on the tax credits and have not yet closed, according to the finance authority. For B.W. Cooper, the end of the tax credit program could kill the 410-unit project completely because none of its financing has closed and construction hasn't started. Project developer KBK Enterprises did not return several calls made over the past week requesting comment. In September, company Chief Financial Officer Mike McCroskey told The Times-Picayune that the company was "at the mercy of the federal government."
Without the extension, Lafitte developers Providence Community Housing and Enterprise Community Partners, will have to come up with a way to replace the revenue projected to come from the GO Zone tax credits. Reached Tuesday, a spokeswoman for Providence reaffirmed the company's commitment to completing the 650-unit project, with or without the credits.
"What I can say for today and for your upcoming story is that we are fully committed to building every unit at Lafitte as planned," spokeswoman Andreanecia M. Morris said.
U.S. Department of Housing and Urban Development officials have said in the past the agency is also committed to completing Lafitte, with or without the credits, though HUD has not yet detailed where new money for the project would come from.
The scramble at Lafitte and B.W. Cooper comes after years of predictions of just such a crunch. Within months of Katrina, the Bush administration allocated $170 million in GO Zone credits to Louisiana. The state housing finance agency had barely begun to distribute the federal outlay when the national economy tanked, taking down with it the market for such credits. As of Dec.1, $113 million out of the $170 million credits -- 66 percent -- were placed in service, helping to create 9,682 units and generate a total of $1.68 billion in total investment, according to the finance authority.
The finance authority projects that another $23.3 million in credits will be placed in service by the end of the month, creating another 1,563 units.
The expiration of the GO Zone credits will mean that the finance agency will have to reallocate $25.9 million in other tax credits and $87.9 million in Community Development Block Grants given to GO Zone projects, according to its records. After months of advocating for the extension in Washington, Louisiana Housing Finance Agency President Milton Bailey is cautiously optimistic that the extension will be passed in before the winter recess.
"We have received much support from our Louisiana delegation and positive feedback from both sides of the aisle," he said. "However, in this uncertain environment, it is simply responsible for us to also make plans to proceed without these decisions being made in our favor."
Louisiana Democratic Sen. Mary Landrieu has advocated loudly for the extension's passage, telling colleagues on the hill that her vote on this matter depends on the inclusion of the GO Zone credits.
"Any compromise reached must have the important GO Zone tax credit extensions that are needed so desperately in Louisiana," she said in a statement released Saturday. "If they are not included, construction that is under way will be shut down, costing 13,000 hard-working Louisianians their jobs and destroying the opportunity for thousands of families to get affordable, quality housing."
While Landrieu"s Republican counterpart, Sen. David Vitter, supported the GO Zone credits when they were introduced, he has kept silent on the issue in recent weeks, instead choosing to focus his energy on a provision in a separate bill that he says would protect American taxpayers from "funding foreign bailouts."