A promising private-loan plan can outmaneuver complex property-rights issues in New Orleans.
By Robert W. Radtke
August 29, 2006
Philadelphia Inquirer
Hurricane Katrina scattered about half New Orleans' pre-storm population of 465,000 and destroyed about 275,000 of its homes. One year later, few have been rebuilt, leaving the New Orleans diaspora unable to return.
Housing is a fundamental social need; its lack contributes to cascading social failures, from poverty and crime to failing schools and health-care systems. For example, New Orleans' hospital and clinic space is still severely curtailed - the estimated 75 percent of health-care professionals who left after Katrina can't return without somewhere to live.
So what's delaying rebuilding? Though bureaucratic red tape is a factor, it's not the biggest.
True, the federally funded and Louisiana-administered $7.5 billion "Road Home" housing-aid program has yet to disburse any money. Congress didn't approve it until May, and there are bureaucratic hurdles to clear, including title searches.
And yes, municipal bureaucratic delays are significant. The city elections in May meant that, before then, no mandate for a rebuilding plan was possible. Meanwhile, only 39 percent of New Orleanians owned a home, and many of them are broke, bankrupt, and/or absent since Katrina. City government can't trespass on derelict properties without owners present. City staffing is often insufficient to adjudicate the ones whose owners are there (many municipal employees are themselves unable to return).
Also, since New Orleans' pre-storm low-income population was extensive, the challenge is not simply rebuilding, but building affordable housing - while owners naturally want high prices.
Yet the primary explanation for the rebuilding delay is the inherent difficulty of the task itself.
Intractable rebuilding problems are endemic to disaster areas everywhere. Rebuilding housing is the highest priority for kick-starting recovery, but it's also the toughest, requiring the most capital and involving complex property-rights issues.
In post-tsunami India and Sri Lanka, where families lack written title to land they worked for generations, with whom should rebuilders deal? In Honduras after Hurricane Mitch, Episcopal Relief and Development (ERD), working with the local diocese, finally bought land outright to get clear title and begin building.
It's not so different in New Orleans, which is filled with old, damaged properties whose deeds are outdated, destroyed or never written down. Absent owners, not to mention Louisiana's French heritage and unique Napoleonic civil-law practices, complicate property-rights questions. Even for adjudicated lots the city donates to rebuilding projects of nongovernmental organizations (NGOs), title searches take months and thousands of dollars. Then the real expenses and challenges begin.
One promising approach is an NGO-private partnership, such as the Jericho Road Episcopal Housing Initiative begun this spring. The ERD and the Episcopal Diocese of Louisiana partnered with Whitney National Bank to build affordable homes on 50-plus adjudicated lots. The partnership takes ownership of the lots, obtains clear title, then leverages NGO donor funds with bank financing.
ERD committed $2.3 million, and Whitney Bank offered additional financing, for a total of $20 million. As building proceeds, the partnership identifies and trains low-income clients to qualify for the financing. A pilot program on five of the 50 lots is already under way, but the partnership envisions 500 affordable new homes - and new homeowners - in central New Orleans within five years.
NGO-private partnerships offer distinct advantages over NGO-only projects:
Private-partner financing confers instant clout and credibility on NGOs, helping them find market efficiencies amid the maze of hoops that can quickly absorb funding and staff time.
While for-profit ventures use deep pockets to dispatch obstacles and get projects built, they may not focus on affordable housing. An NGO-private partnership can do both.
The NGO-private partnership model is replicable and capable of being easily expanded. The more partnerships that succeed in qualifying clients and completing projects, the more lots they may attract, and the more financing they can leverage for more affordable homebuilding and homebuying on a larger scale.
The Rev. Dr. Martin Luther King Jr. said in 1967, "We must come to see that the whole Jericho Road must be transformed... . True compassion is more than flinging a coin to a beggar... . An edifice which produces beggars needs restructuring." Hence, the name of this first NGO-private partnership.
Such innovations may do more than surmount obstacles to rebuilding New Orleans. By leveraging funding, training new homeowners, and potentially building affordable housing on a wide scale, they may also help restructure the city's pre-storm patterns of poverty.
Robert W. Radtke (rradtke@er-d.org) is president of Episcopal Relief and Development in New York.