Own a Home, But Not the Land
Residents of New Orleans’ beleaguered Lower 9th Ward debate ownership models that they hope will bring life to their depopulated neighborhood.
A half decade after Hurricane Katrina’s knock-out blow, New Orleans’ Lower 9th Ward is a checkerboard of homes and empty lots.
The energy-efficient homes of the Make It Right Foundation stand out on the landscape, their contemporary designs contrasting with weed-filled empty lots. There are approximately 5,000 lots in the community, some with homes and some without, according to Patricia Jones, executive director of the Lower 9th Ward Neighborhood Empowerment Network Association.
Some simple measures bear out the losses. The Greater New Orleans Community Data Center says this traditionally African-American neighborhood had a higher rate of homeownership in New Orleans prior to Hurricane Katrina (using figures from 2000) compared to the city as a whole. More than five years after it was severely flooded, the Lower 9th's population has fallen 80 percent compared to 2000, while the city of New Orleans as a whole has seen a 29 percent decline and the metro region an 11 percent fall. *
Prior to the storm, the Lower 9th Ward had just over 14,000 residents. In 2010, that number had plummeted to 2,842. Adding to the sense of desolation is the disappearance of housing. There were 5,601 units in 2000, a figure that collapsed to 2,039. Some areas of the community are so overgrown with weeds and shrubs that one feels more like being in the country than in the city.
The lack of people and buildings isn't all that shows the difficulty in the community. Residents have complained since shortly after the storm that the lack of adequate street lighting makes it easier for crime to flourish. Another challenge is the lack of a regular grocery store. Although there are two farmers' markets on the weekend, there is no full-service, daily grocery, which forces many without cars to shop at a gas station convenience shop. Meanwhile, only one school has reopened in the area.
To repopulate the 9th Ward and bring the dream of home ownership to those who wouldn’t otherwise qualify to buy a home, Jones' organization is partnering with the Greater New Orleans Foundation to establish a community land trust. Under the trust, a person can purchase a home, but the land underneath the structure would be leased from the trust. The trust project is being piloted in the Lower 9th, but the plan is for similar community land trusts to be set up in other New Orleans neighborhoods with distressed properties.
But some longtime residents oppose the project, saying that the Lower 9th Ward has no need for anything other than traditional home ownership. And, the Holy Cross section of the community would seem to support this.
The tensions surrounding this debate have roots in past injustices. Even before flood waters swept through the community, Jones said, predatory lenders were snapping up properties through foreclosures. After the government-built flood protection system failed, some New Orleanians argued that the Lower 9th Ward shouldn't be repopulated at all.
Adding insult to injury, a homeowners' rebuilding grant program — the Road Home — has become synonymous with mismanagement; federal judges suspended the program's award formula in August because of a preliminary finding that it was discriminatory. With tens of thousands of homes continuing to blight the city, many of these homeowners haven't returned because of the difficulty getting sufficient funds from the program to rebuild.
It should come as no surprise, then, that the debate over home ownership is particularly contentious here.
While he had come to appreciate the community land trust concept, Willie Calhoun of the New Life Intracoastal Community Development Corporation feels “it's not in the benefit of this community.”
“If you have children, would you recommend that they buy but don't own the land?” he asked. Calhoun and others in the community argue that since property values are currently so low in the Lower 9th Ward — lots can be had for as little as $8,000 — it makes no sense for someone to buy a home for $100,000 and not to own the land it stands on.
The Greater New Orleans Foundation, as part of a $1,350,000 grant from the Ford Foundation, is piloting the community land trust project. Ellen Lee, program officer at the Greater New Orleans Foundation, said that those who would become land trust members are those with marginal credit and no down payment who, in the current financial reality, would not be eligible for a traditional mortgage.
The goal, Lee said, is to “make homeownership more affordable than it might be otherwise,” especially for those otherwise shut out of the process. Purchasing through a trust is an option, but Lee stressed that no one considers it “the answer.”
To ensure that prospective buyers understand what they are doing, Jones says that they must participate in a series of workshops on home ownership. Through this process, Jones says, participants learn about all the options available to them, not just the land trust.
Each lease for a land trust property, says Joe Gray of JEG Planning, a consultant working on the project, would be for 99 years and cost $25 a month. It would renew automatically and be inheritable. Lessees would have to comply with terms set by the trust regarding issues like maintenance and financing.
Gray said that Neighborhood Empowerment Network Association would “maintain ownership of the land on behalf of the collective community.” He explained that participation on the organization's board as a trust member would give residents “control of and responsibility for the stewardship of the land.” Jones also noted that there are only 40 lots currently involved in the project, a small percentage of the roughly 5,000 lots that make up the Lower 9th Ward. The properties are drawn from those sold to the Louisiana Land Trust through the Road Home program; homeowners had the option of selling to the state of Louisiana after Katrina if they didn't want to rebuild in the same location.
Lee says a community land trust will ensure long-term affordability for the current tenant and future ones.
Gray explained that in the Lower 9th Ward this would happen by tying the homebuyer's equity to the amount of money they put down. When the property is sold, assuming the house increased in value, the trust would take its share of the profit and use that to help subsidize the next buyer. Gray also said that in New Orleans, the sponsors are “bending over backwards to give homebuyer equity” and to build member assets.
While Jones sees the trust as a way to give people get a leg up with their housing and asset building, some argue that land prices in the Lower 9th Ward are so low that adding that sum onto the cost of a home makes the difference negligible.
One concern with the community land trust model raised by Rashida Ferdinand, executive director of the Sankofa Community Development Corporation, was whether it would help families build equity. That question and its corollary, whether homeowners will profit when their home prices rise in value, are leading issues voiced by opponents of the trust.
The concerns arise in the context of predatory and discriminatory lending that have drained the assets of middle-class minorities across the country. In the wake of the financial crisis, borrowers now have a much harder time obtaining mortgages at all, putting low-income and minority communities at an even greater disadvantage. And, adding further complications to this mix are the unscrupulous practices that many large banks have followed around foreclosure, leading people to lose homes unjustly.
Gray acknowledged the equity question as a legitimate concern, but he explained that land trust members could build equity without owning the land. “They're putting together a lease-purchase program that would allow people” to become homeowners. “During the term of the lease, the CLT retains ownership of the house and the land, and simply rents the property to the prospective buyer;
If the renter decides to purchase the home, a ground lease is issued, separating the house from the land, with the buyer agreeing to purchase the house and lease the land.”
During the lease period, NENA would take a portion of the rent for the house and put it into escrow so that it could be applied toward a down payment at the price set when the lease was signed, if the lessee decided to buy. This, Gray said, was a way to enable people with few resources “to get in the game.” As of mid-February, Jones said that were 25 people on the waiting list to buy community land trust properties.
In spite of Gray's reassurances, opponents such as Ferdinand question whether land trusts have been shown to repopulate neighborhoods, something the Lower 9th Ward sorely needs. She also maintains that the abundance of programs available to support first-time homeowners means there is no need for people to lease land rather than buy it outright. It appears that the re-population question hasn't been studied, although the National Housing Institute has issued an exhaustive report on the pros and cons of shared equity housing, acknowledging:
“Although the record is mixed and the documentation is spotty, [community land trusts] and [limited equity cooperatives] have clearly had some success in both types of neighborhoods, at least when it comes to stabilizing conditions for their own residents. What is less clear is how successful these models have been in stabilizing conditions outside their own domain, since their wider impact on persons, properties, and prices in the surrounding neighborhood has rarely been studied.”
An additional concern comes from a lawsuit filed against Neighborhood Empowerment Network Association by a former employee alleging sexual harassment. The suit also contains allegations that Jones used NENA funds to pay for a vacation for her husband. Asked about this, Jones replied that it is a “totally inaccurate allegation.”
Clearly, the area won't rebuild completely unless serious policy steps are taken and not only in the area of home ownership. Residents complain that there is a need for another public school, but there seems to be no movement on the part of the city to make this happen. Some also see the possibility of gentrification as a way to get the community back on its feet, although this doesn't seem like an imminent prospect.
While property prices may be low enough to enable anyone to become a homeowner, the land trust is a practical attempt to bring people into the community, but given the state of the area, it is only one small step in that direction. Additionally, given the vociferous opposition to the project, it's worth considering whether there are ways community members can decide on development strategies together.
* An earlier version of the story understated the population loss in the Lower 9th Ward, characterizing it as in line with losses in the city as a whole.