Not everyone describes the SRPP as "moving quickly," but most agree that getting one of the loans isn't simple and replacing the state's rental housing stock, even more than two-and-a-half years after Katrina, will take more time and patience.
Calvin Parker, manager of multi-family housing programs for the state Office of Community Development, has 28 years of experience working with low-income affordable housing projects; he says that compared to a similar program in Mississippi, the SRPP is doing well.
Parker maintains that even though his agency made a concerted effort to explain to landlords that this is an "incentive" program designed to replace private loans that applicants would first have to obtain on their own, many landlords still thought they were getting "pre-construction" loans. Under the program, applicants receive forgivable loans only after arranging for private financing, completing repairs, passing inspections and renting renovated units to tenants.
Thus, the loans are funded at the end of the process, not the beginning, and can be "forgiven" after participating landlords rent qualifying units at low rates for 10 years. Parker says the SRPP was intended for "smaller landlords" those renting up to 20 units who weren't experienced in government programs and who need assistance in completing projects.
'That is completely understandable, and it is a good goal to help people who have limited chances to find help in other places," Parker says. "So we take on that responsibility it's extra responsibility from most affordable housing programs, which are used to working with larger contractors, professional developers and folks who are used to this kind of process."
The SRPP began accepting applications in January 2007. Walter Leger, chair of LRA's Housing Task Force, described the U.S. Department of Housing and Urban Development-funded program then as "designed to help mom and pop landlords preserve their investments and offer safe, comfortable and affordable homes to families trying to come home."
The state lost more than 82,000 rental units as a result of Hurricanes Katrina and Rita. The SRPP was supposed to result in up to 18,000 repaired units, the vast majority of them being low-income affordable. Of the 13 parishes affected by the storms, Orleans Parish suffered the greatest loss in rental units and is supposed to get the biggest slice of the SRPP pie $577 million in forgivable loans. The same company that administers the state's Road Home program, ICF International, also runs the small rental program. ICF is being paid a total of $123 million to run the small rental property program for which it already has received $26 million.
After two application rounds, SRPP announced that it has awarded $593 million in "conditional awards," which are designed to produce 12,792 apartment units of which 10,951 will be affordable for low-income renters.
The conditional award total sounds impressive, but according to Parker, that's only the beginning of the process. After receiving a conditional award letter, an applicant must agree to the award amount, offer proof of residency, support the correctness his or her answers to the competitive evaluation form (for instance, if a landlord indicated the property was "lead free" it would have to have been built after 1978, or the applicant would need a lead-free certification), and send proof of all that back to SRPP. Then, SRPP officials must clear the property's title, conduct an environmental review, run a bankruptcy check on the applicant and verify the owner's identity.
While this is happening, applicants who are certain they will qualify for the forgivable loans can arrange for private construction loans and begin renovations. If they don't have the means to do that, they must wait for a commitment letter guaranteeing forgivable loans provided they follow SRPP procedures.
'We knew there would be a considerable amount of time before we were able to spend any money," Parker says.
When Gambit Weekly first reported on the SRPP in November 2007, there were only 932 "live applications" out of an original 2,693 left from the first round of conditional awards. The high fallout rate didn't surprise Parker.
'When we looked at some of the applications people had written, it was clear some folks were going to have a difficult time," Parker says. "I think this is the most difficult challenge anybody in the United States has faced the idea of bringing New Orleans back at this particular time. And providing affordable housing is one of the most difficult things to do anywhere."
As of last November, SRPP had issued only 14 commitment letters for the entire state. That number has now grown to 661, representing $55 million in funding and 1,275 rehabilitated rental units. That leaves more than 6,000 people waiting for their letters. Parker points out that some of those applicants were only recently added from a waiting list, so it isn't fair to consider them part of round two. The program still has more than $814 million in uncommitted funds and is mandating that ICF send out 500 commitment letters a month by April.
Donald Vallee holds 17 commitment letters for 18 rental units, and while he thinks the SRPP works, he considers the process "a nightmare," adding, "It's not just [SRPP]." Vallee, president of the New Orleans Landlord Association, worked as a commercial banker for more than 20 years and is very familiar with how banks approve loans. He says that even when presented with commitment letters, banks are loathe to lend money if an applicant doesn't have a good credit history particularly now, in the throes of the nationwide sub-prime lending crisis. Vallee won't go so far as to describe the process as Darwinian, but his description sounds a lot like the notion of survival of the fittest.
'The more knowledge, the more education and the greater the means, the greater chance you have to succeed," he says.
To level the playing field and get more applicants through the process, SRPP plans to make some changes. In February, officials issued a Request for Qualifications (RFQ) for independent contractors who are experienced in getting construction loans, hiring architects and contractors, and basically assisting applicants through the SRPP process. Parker adds that his staff is exploring ways to help applicants get approved for construction loans. One proposal is a loan/loss reserve fund by which SRPP would put money into an escrow account with a participating bank to cover possible construction cost overruns. Another idea is for SRPP to act as a lender of last resort and start advancing funds for construction loans. Before any of the proposed changes can be implemented, Parker will have to get them approved by the LRA board, the Legislature and HUD. Parker says HUD is already aware of the proposals.
Another recent change occurred when ICF laid off 30 applicant intake specialists and eliminated their positions. The company issued a statement regarding the layoffs, saying it was "because we are no longer accepting applications to the program Parker, who oversees the program for the state, says he can't answer specifically what ICF is doing with its staff, but adds, "We've hired 20 financial advisors to help owners navigate the process of bridge financing and getting buildings complete."
A source familiar with the SRPP says 15 percent of all units in the program have been ready for inspection for at least six months but have sat empty. The source adds that the reason the property examinations didn't take place was because there was no official protocol for inspections. Parker disputes this, saying that the ready-to-rent units were likely part of a multiplex where some units were still being repaired. SRPP rules originally stated that units couldn't be rented until final inspection. Officials have since rescinded that requirement, allowing for finished units to be rented to qualified tenants while awaiting inspection.
As for Parker's contention that his program is progressing quickly in comparison to others, he's right. According to the Mississippi Disaster Authority (MDA), which oversees that state's small rental program, Mississippi has yet to fund any of the 3,700 affordable rental units that have received approval. When asked about the Mississippi program's progress, MDA spokesperson Lee Youngblood offered a familiar refrain: "We feel good where the program is."
None of this is likely to please folks waiting for construction loans or hoping to get affordable housing in New Orleans. That probably goes double for Mattie Mack, the Ninth Ward landlord first interviewed by Gambit Weekly last November ('Stuck on Stuck," Nov. 13, 2007). When Mack found out she wasn't going to get a pre-construction loan, she became distraught and said she didn't know what she was going to do. It would be nice if we could report that Mack finished her construction, rented the apartment and had her SRPP money in hand. Unfortunately, that's not the case. When we attempted to contact Mack, her line was disconnected, which some might say sums up the SRPP's relationship with the city's smallest landlords.