Legislators approve LRA rental program: Affordable-housing clauses draw fire

A group of mostly Republican lawmakers had called on legislators to vote against the program. State Rep. Steve Scalise, R-Jefferson, on Thursday asked the LRA to re-evaluate the requirements in the program. He said lawmakers had been misled into thinking that the federal Department of Housing and Urban Development had required the specific income restrictions.

"They're hiding behind HUD, and it's not HUD's requirement to do it," Scalise said.

The LRA recently approved several changes in a plan for using billions in federal dollars to rebuild rental housing damaged by Hurricanes Katrina and Rita. Those changes were submitted to the Legislature as five separate items on a mail ballot, all of which passed. The changes now need HUD approval.

The LRA has proposed several programs backed by federal block grants to encourage low-income and mixed-income housing developments for rental property. Those include a low-income housing tax credit program approved by lawmakers Thursday. The Legislature also approved a new plan for assisting owners of mobile homes, and a program to help local governments implement a new statewide building code.

The most controversial item on the ballot was the program for small-scale rental property, aimed mainly at buildings with one to four rental units. The LRA wants to spend $869 million over the next 10 years to repair an estimated 18,000 of these units.

The program would offer no-interest loans to small-scale property owners only if the landlords rent to people with incomes below 80 percent of the local median income and charge rates capped at "affordable" levels, which have not been determined. A property owner would not have to pay back the loan unless the building were sold.

On that program, the Senate voted 26-11 and the House voted 62-32, the narrowest votes of all the items.

HUD maintains figures for median incomes of metropolitan areas, but has not completed calculations for median incomes in the New Orleans area after Hurricane Katrina. Its current figures apply the same average number to all parishes in the metro area.

For a household of four, the median income in the New Orleans area is $52,300. The threshold for a low-income renter would be 80 percent of that figure, or $41,900. The low-income threshold for a household of three is $37,650 and for a household of two would be $33,500. A single person would have to make $29,300 or less to qualify as a renter.

Scalise said he did not oppose the affordable rents but criticized the income requirements as unfair to the middle class. The New Orleans area needs more apartment units, a problem holding back the area's growth in work force.

When Scalise tried to build support for a vote against the income requirements, House Speaker Joe Salter, D-Florien, a Blanco ally, wrote members defending the LRA program.

Salter said HUD regulations require Louisiana to spend at least half of its emergency supplemental Community Development Block Grant dollars on low- to moderate-income people and that the LRA was simply guided by what the federal agency demanded.

An Oct. 4 letter to Scalise from L. Carter Cornick III, HUD's general deputy assistant secretary for congressional and intergovernmental affairs, said, "This is partly true, and partly is the LRA's program design choice." While the overall rule requires that 50 percent of the entire disaster recovery grant from HUD must be used for activities that primarily benefit low- and moderate-income households, it is possible to get a waiver from some of the requirements and to allow property owners to rent some units to low- income tenants and others to anyone at market rates, the letter said.

Cornick said that, "to date, the state has not requested such a waiver."

HUD noted that Mississippi's plan would rebuild rental units allowing renters with and without income restrictions.

The LRA's plan requires that 100 percent of units in the program serve low- and moderate- income people. The HUD letter said its Community Development Block Grant program does not require that 100 percent of the small-scale rental program meet those income levels, under some circumstances.

Scalise said the Salter letter and the LRA's previous misinformation about HUD's requirements raise serious questions about whether the Legislature really understood the rationale behind the program.

"I'm very disappointed that they misled people in order to get the plan passed," Scalise said.

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Robert Travis Scott can be reached at rscott [at] timespicayune [dot] com or (225) 342-4197.