The Louisiana Weekly’s Inside political track

St. Thomas Reborn…

It is hard to know where the Irish Channel ends and where the place once known as the St. Thomas Housing development begins. Cross from one street of Victorian shotgun homes and balconied four-plexes to…another street of Victorian shotgun homes and balconied four-plexes.

Oh, the paint is a bit newer, the balustrades are firmer, and streets lack the tell-tale cracks that reveal the ever-settling land of New Orleans. But, despite a freshness, River Garden, the restored St. Thomas, resembles its surroundings so perfectly that one never knew a housing project once stood on its land.

That was the promise of the HUD Hope VI program when Pres Kabacoff and Historic Restoration Inc. took up where two other developers failed 10 years ago. The company, which had become known for its work in rehabilitating Warehouse District properties and historic structures in inner cities across the country, decided to take up the challenge of building a mixed-income replacement to the dangerously dilapidated St. Thomas project.

Last Tuesday, the new head of HANO told an assembled crowd, “A year ago today, there was a similar gathering, but it looked out at something quite different, tents and blank ground…Now there is a neighborhood. The first seventeen units are occupied, eight by former public housing residents of St. Thomas. And, this is just the start.”

One former resident walked into her new shotgun house in tears, “This is wonderful, more than I could have ever hoped for.”

Walking with her through the double, one saw a new a state-of-the-art kitchen, living room with paneled trim, and a brand new washer and dryer. She even boasted about the small the backyard, a luxury she never had as a resident of one of the upper floors of the old St. Thomas.

Such a mixed-income neighborhood was the objective of the project all along. Hope VI, first envisioned by HUD Secretary Jack Kemp and continued under his successor Henry Cisneros, used a combination of public and private dollars to underwrite the costs of reconstructing public housing in America. The funds provided for the construction of conventional subsidized apartments for low-income families, market rate apartments, and private townhomes. In other words, the combinations attempted to build viable communities where only hopelessness existed before.

As Michael Liu, Assistant Secretary of HUD for Public Housing, told the Weekly, “Using Wall Street money and the power of the federal subsidy, we can unlock the untapped values held in assets in Louisiana. Thinking of public housing as assets, as we did to finance HUD, has allowed us to unlock the potential of St. Thomas and places like it across the country.”

Liu spoke of building communities. Kabacoff expanded on the idea. “If you overload a neighborhood with very poor people, it starts tipping towards market-rate people leaving. If a city is going to be healthy, you need to disperse your poor and concentrate your wealth. In New Orleans, we concentrate our poor and disperse our wealth. This particularly affects African-Americans.”

“The white poor tend to live where they have some contact with more affluent people. There are ‘money makers’ around. The black poor do not have those opportunities. There are no market raters around. The goal of Hope VI was to break up concentrations of poverty.”

As recently as a year ago, former St. Thomas residents remained skeptical that they would have a place in the new community. Felton White, told the Weekly that he worried that the residents might be forgotten.

“I don’t want to sell out the people,” he said. “I just want action.”

St. Thomas is the test of the theory.

As Liu put it, “This could be the model for the reconstruction of public housing in America.”

Throughout the last 10 years, others have held different views. Some former residents complained that the redevelopment was a plot to kick them out of their homes, even though most of the buildings were in such a state of disrepair that they faced being condemned. At community meetings, Kabacoff and Co. were accused of fulfilling the role of “Nazi invaders” seeking to hurt poor people.

At the time, Kabacoff, who had dedicated his career to the generally popular task of putting dilapidated properties back into usage, said it was an unusual feeling.

“This was a new experience for me…being a lightning rod.”

Even flanked by former N.O. Mayor Sidney Barthelemy, the locals continued to view HRI as an invader. St. Thomas Resident Association President Barbara Jackson explained that many of those complaints only dissipated when HUD guaranteed interim housing, first right of refusal on occupying the newly constructed townhomes, and a job training program with the new store next door.

Then as that battle ended, the Wal-Mart struggle began. The original Federal Grant to HRI to demolish the structures at St. Thomas and pay the relocation costs of the residents came to $25 million. The actual cost to HRI, when the project got underway, was $32 million.

“Before you start, you are $7 million in the hole,” HRI President Tom Leonard told the Weekly.

The Louisiana Industrial Development Board bonds were keyed to building to the townhomes. That money could not be touched. HRI needed a way to make up a deficit that exceeded even their most ambitious profit margins.

Enter Wal-Mart

The Arkansas retailer has actively sought to expand in America’s inner cities, seeing it as the last untouched market available. Kabacoff aided Wal-Mart in obtaining permission to build next door to St. Thomas on an abandoned industrial site. In exchange, part of the tax money paid to the city went to St. Thomas in the form of a “T.I.F.” that covered the $7 million dollar deficit. Wal-Mart and HRI also agreed to jointly fund a job training program for former St. Thomas residents.

Inclusion of the retailer brought tremendous support from the residents of the housing development, and vocal opposition from Preservationists and residents of the adjoining Lower Garden District. Kabacoff, who had spent his career as the champion of historic preservationists, the man of decade for those that wanted old properties to live again, was now seen as the city’s greatest villain.

Some Magazine St. merchants worried that the low prices and easy accessibility of Wal-Mart would put them out of business. These storeowners formed an alliance with preservationists and disgruntled residents of St. Thomas to stop Wal-Mart, and by corollary, the entire Hope VI redevelopment.

“It was really silly,” Kabacoff said, “We were building the Wal-Mart on an old industrial site. There was nothing historic to preserve…And, most of the people who are going to go to the Wal-Mart don’t shop at those businesses on Magazine St…[And,] You have to consider if those people [the preservationists] would really have cared so much about the residents of St. Thomas if there was no Wal-Mart going up.”

Preservationists at the time countered that the traffic problems would affect the nature of the Lower Garden District, but this had little impact on members of the New Orleans City Council, who concluded, as Oliver Thomas did, that most of the cars would enter and exit on Tchoupitoulous St., and would not pass through neighborhood roads.

Today, Kabacoff takes much pride in the completed Wal-Mart. Built to resemble the former cotton warehouses, it is flanked by many of the historic structures HRI pledges to save. Studies reveal that overall traffic has not increased measurably. And, rents on Magazine St. have increased by 30 percent in one year, due in large part to the removal of a housing project.

The most serious complaints were printed here in the Weekly. Some preservationist critics alleged that HRI was unduly profiteering from the St. Thomas project – more than the amount HUD allows. They used figures from H.R.I.’s presentation to the New Orleans City Council on December 6, 2001 (and the packet the company distributed entitled Information on Construction Site 12/17/01).

They argued that in the two development zones within the project, CSI and CSII, per-home construction costs drastically exceed the amount that it would take to build similar-sized houses in a normal residential development.

According to the line of reasoning, in CSI, the total amount the total construction costs amount to $50.2 million. The hard cost to H.R.I. and its investors is $25,690,287 and the total subsidy from the federal government is $29 million.

Critics misread the figures, HRI President Tom Leonhard told the Weekly. They do not factor in road and sewer construction costs, costs of clearing the remains of the property, and other building expenses. When those are included, costs almost equal the overhead.

As he explained, “Our profit is basically regulated by national fees and standards. They [HUD’s auditors] allow a 15% developer fee. We are getting 12%. We can’t make a profit per house beyond 12%.”

Kabacoff interjected, “When you add the fact that we advanced much of the money without interest, it is even less.”

The constructed houses seem to back HRI’s premise that these were higher-end homes than public housing could boast of anywhere in America. The properties contain on average more square footage, and appliances (such as dishwashers and laundry machines) that are not standard in the typical HUD apartments.

Some have worried that the difficulties of returning to St. Thomas could prevent the former families from relocating into the improved homes. The Wal-Mart TIF pays for extensive job training opportunities, but even Kabacoff thought in the past few months that was not enough]

River Garden is taking applications for both market rate and subsidized housing units. To find out more information, call HRI at (504) 566-0204 or go on the web to