Economic Development and Special Development Projects Committee.

So Jeff kind of touched on the pilot terms as it relates to the revised statute in which the New Orleans Exhibition Hall Authority and the RD&I Sub-District are granted the ability to approve pilots on ad valorem taxes within the river district. Once again, the New Orleans City Council has authority to approve or deny pilot agreements referred to the city by the board or the RD&I Sub-District. Applications are reviewed by the City Office of Economic Development, followed by a hearing before the City Council's Economic Development Committee. Then we are going to move on to pilot terms. In regards to the pilot terms, there is a $300,000 application fee paid to RD&I Sub-District at the time of the term seat signage and a $5,000 closing fee paid to RD&I as well upon the execution of the pilot lease. There is also an annual administrative payment of $5,000 paid to RD&I Sub-District escalating at 3% annual over the term. This is scheduled over the first day of December in each calendar year commencing the year of the conveyance of the project or substantial portion thereof. And then lastly, the pilot shall be in effect for a 40-year term commencing in the year of the certificate of occupancy and choice, potentially in 2028. So we're looking at a 480-month term. Next we have public project funding, which I'm sure that the development team will expound upon. But the project will be funded by public-private investment generated through low-income housing tax credits, CDBG funds, debt financing, soft debt, as well as developer equity. So to maintain affordable unit pricing for the promised full 40-year term, this capital stack of funding along with the pilot is critical to the development of this mixed income density property. And you'll see here, like I said, we have a mix of funding from Capital One in regards to debt financing. We have some federal public funds in the amount of $16.5 million from CDBG grant funding, as well as developer equity from the $6.5 million we got financing with the Convention Center, as well as with the Convention Center with public state funds in regards to the $6.2 million in capital bond funds. And not to mention the soft debt in regards to the $1.6 million in deferred developer fees. So with respect to fiscal impacts, total development subsidies are estimated at $105 million. The total pilot value has been estimated by the Assessor's Office at $33.4 million over the course of 40 years. The property is currently owned by the Convention Center and is therefore exempt for Avaloran taxes. And in the first five years after the pilot has expired, the property is estimated to generate roughly $4.2 million in new property tax revenue. And long-term rental income is also projected to stand at $3.3 million annually. Next we have... Can I ask a question? Oh, yes. You said something about $4.2 million? Yes, and I can expound upon that. So in regards to the calculation provided by the Assessor's Office, roughly we basically did a calculation over the course of 40 years in regards to the current millage of I think it's 1 in 33 point something to deduce what the calculation would be provided the year 41 through I think it's 45 in regards to what that value would be. It's roughly $835,000 annually after the expiration of the pilot. This would be once it came back on the docks? Yes. Oh, gotcha. And then you said over the 40-year period it's about $33 million? Yes. While it's under the pilot? Exactly. Okay. And we'll also expound upon what actual payments will be made during that course of the 40 years as well. Got it. Thank you. Next we have housing impacts. And so we're looking at 220 affordable and workforce housing units that will be created at the River District. So rents will remain affordable for the life of the 40-year term, meaning that household incomes much range between 20 to 80% area median income to be eligible. So we're looking at a rough mix of four buckets of AMI percentages that like I said range from 20 to 80% for 140 units at 60, 50 units at 80% AMI as well as 19 units at 30% AMI and 11 units at 20% AMI. So for example, the average upper income for a two-bedroom would roughly be approximated at $55,600. And the average monthly rent may not exceed 30% of the gross household income. So while the average annual gross residential income is projected at $3.3 million. And we have some additional breakdowns just in case y'all have any questions in terms of what those specific rents and incomes are over the course of the one to two unit configurations. Next we have job creation. The Ravonna project is estimated to create 225 construction jobs. The development team commits to complying with all city standards and requirements as it relates to construction. I know Councilmember Harris spoke to that in regards to the higher NOLA and the city local hiring requirements as well as the living wage terms and the DB requirements. So RD&I will monitor EB compliance via monthly reports, financial records and project site inspections. So upon project completion, the commercial project component is estimated to create 10 total permanent jobs with additional employment to come over time once tenant businesses are established. So with all that said, OED recommends approval of the proposed Ravonna Apartments Pilot Lease Agreement. The proposed project will serve as the first residential anchor in the NOLA River District. This productive mixed income asset will yield high quality construction, long-term affordable housing, white box commercial retail space, job creation, all of which will support a long-term sustainability of the city and the expanding district. Expected annual impact includes over $3.8 million in rental income. That includes $3.3 million gross potential residential rental income as well as $471,000 in commercial tenant income, as well as $835,000 in property tax revenues, which of course additionally adds up to long-term economic benefits to come.

Lastly, we have just an aerial snapshot of Phase 1, which is going to be pretty busy. In addition to the Ravonna project, which will happen, like I said, over the course of 18 months, construction crews will be working across the district on other projects such as the Shell Riverside Regional Headquarters, which is well underway and near completion, as well as the Louisiana Heritage Music Experience and the Cultural Center, just to name a few. So that wraps up our presentation. Thank you, Councilmembers, for your time. With the support of the development team, OED. happy to answer any questions that you may have. Thank you very much. Thank you. So I just want to be clear, this is the first phase of housing at the River District. There's 900 units committed to be built contractually, correct? Correct. And of those, 450 needs to be affordable workforce, but there's also market-rate housing that will also go on the site as well? That's correct. Okay. We're also contemplating things like retail, grocery stores, pharmacies, essentially a new neighborhood in the middle of a place that had nothing on it except for Mardi Gras parking. Okay. Any questions from the dais? Jason, I also remember you, sorry about that. Thank you very much. Good morning everyone. Let me, I will admit I'm probably the least intelligent person on the City Council, so forgive my questions. We use a lot of terms like pilot and AMI, and you know, the average resident just doesn't understand what that means. So I want you to be very specific with me when we say pilot, okay? What is the City giving up here? What's skin in the game? What are we doing? So break that down for me and be very, very specific. Absolutely. Thank you, Councilmember Hughes. So yes, there's a lot of jargon, especially when it comes to affordable housing development, so happy to try to demystify any of that. What happens in a pilot transaction, it stands for a payment in lieu of taxes, and mechanically what happens in that is that a public entity takes ownership over a property. Unlike a restoration tax abatement or ITEPs or other incentives that we hear about frequently, in a pilot a public entity is taking possession of a property, and that is what creates the tax abatement. And in doing that, there's a lease that happens between that public entity and the development that happens on that piece of property, and that lease sets forth the terms under which the development will pay taxes and will meet other provisions that the public entity wants to require in that transaction. So that at its simplest level, that's what happens in a pilot, and that's why it's different than a lot of other types of incentives. Yeah, I really just want to know what is the City, what are we giving up, what's skin in the game are we putting here? What are we losing, what are we giving up, what are we forfeiting, what are we foregoing? Absolutely, so there's two ways to look at that. One is we're foregoing nothing currently. This property is currently owned by the Convention Center, it has been for I think 20, 23 years maybe, and I think in a very real sense, if a project like the River District doesn't happen on that site, it almost certainly will remain a vacant piece of property that the Convention Center owns for the foreseeable. And so I think in one sense the City isn't actually giving up anything because we're not making any money on this property currently, so I think that's an important baseline. I think what you're also asking, Council Member, is if this project were somehow financially feasible with the ability to pay taxes to the City, that's the 33 million over 40 years I think that the assessor generated, and so that I think is the number you're probably looking at. It's about $800,000 a year in property taxes that the property would pay. Is that correct? I'm looking to the developer here. So that if the project was feasible, which I think what you'll hear today is that the project is not feasible without this type of public investment in the property, there would be a potential ad valorem tax of about $835,000 a year to the City, and in exchange the City would be getting the 220 units of affordable and workforce development. So yeah, I'm confused. So are you saying that we will be collecting $800,000 a year in property taxes, or we're not going to collect that? Under the pilot proposal, we would not be collecting that. Right. That's why I want you guys to just be very specific with me. I feel like you all are talking around the world, and I'm not trying to do a gotcha exercise, but I think sometimes when we sell these things we're just not really transparent and honest with the public. And so as an appropriator, I want to fully understand, especially in these challenging financial times, you know, what we're doing. So this type of pilot for this type of housing development, have we done that for other developments throughout the City? Absolutely. Give me some examples. Give me some examples for District E that we've done this for. Sure. So District E has had a number, the DKTMJ project next to Executive Plaza is a low-income housing tax credit project. There are a number of other ones. But you're talking about a Reed and Lake Forest? Reed and Lake Forest, yes. Yeah, that's a senior living facility, right? That's correct. 100% controlled, right? No market units, right? That's right, yes. And pilots happen throughout the City. They're evaluated on a case-by-case basis. How do we pick and choose? There's a rigorous application process. So to be clear, the City doesn't do pilots for very good reason, and that is that the City would have to take possession of these properties, which there's a charter-defined process by which the City acquires and disposes of property. And so around the City, around the state, around the country, these payment in lieu of taxes happen through other public entities.

So in the case of the City, that's either Finance New Orleans or the Industrial Development Board. And they have a rigorous application process by which those projects are evaluated. Let's dig into AMI. That's a term that people love to throw around that I'm not sure I completely understand what it means. And I think I just have a really different definition of affordable compared to, you know, other people. I think sometimes we just out of touch with the reality, you know, of the citizens who actually live in the City. So 11 units, 20% AMI. What does that mean? Break that down for me. So give me an example. Absolutely. So I'm gonna let Emily and Michael speak to the specific rent amounts, but just for the public's benefit, area median income is a jargony term. It is a term that's set by the Federal Department of Housing and Urban Development. And so it's a rigorous term. And it's an analysis of every city in the country that HUD does each year. And it sets rents based on what income levels are and some other variables. So when we do this AMI, is it that the median income only within the City of New Orleans? Correct. I'm sorry, it's set at a market level, so that for the whole MSA, for the New Orleans metro area. So when we say metro area, that's very different than the city itself, right? So I want to be clear here. Is it just the City of New Orleans, or when we say metro area, are we taking into account Jefferson Parish, St. Tammany? Tell me what we're taking account. That's right, it's a whole New Orleans MSA, so New Orleans, Metairie, Kenner, I believe. Yeah, so that becomes very tricky, right? Because, you know, you can have people in St. Tammany and Jefferson, right? Totally different income brackets, right? St. Tammany is actually not in our MSA. Give me the places that are. Sure, well it's really the south shore of Lake Pontchartrain would be in the MSA. Break it down for me. Orleans. Orleans, Jefferson, St. Bernard, Blackman, I think is also in that calculation. Metairie, Kenner. Yeah. So again, you could have hypothetically in a situation where now you have the income level sort of inflated, right? Not necessarily matching the jobs in this city, not necessarily matching the incomes of this city, right? So now tell me about the 11 units, that's 20% AMI. Tell me what the cost of those units would be. The cost of the units? The rent. The rent. Okay, so for a zero bedroom, those are going to be the 20% AMI. Define zero bedroom. Zero bedroom is a studio. Studio. So everything is in one setting. Yes. Alright. So you have your 20% AMI and your 30% AMI are our permanent supportive housing units. Those are usually covered by a state voucher. In this case, Louisiana is not receiving federal funds for those. I just want to know the cost. Right. We're utilizing a subsidized voucher from the Housing Authority. So the rent for a zero bedroom under that is $1,617. $1,600. Right. So that is, it's a subsidized unit. So that's the lowest rent. Right. But it's a subsidized rent and so the resident will only pay 30% of their income. So that's where your income levels come in. So the HUD income limit for an extremely low income is one person who makes $18,650 a year. And so they would never pay more than 30% of that amount. What if you're making $30,000? So then you would not be in your 30%. You would be, for one person, you'd be more closer to under 60%. So your 50% AMI for one person is $31,050 a year. Okay. So, alright. Stick with me here. Right. So if you're making $32,000 a year. Right. Okay. What would be your rent amount? For a one bedroom unit. For a one bedroom unit, you are going to pay $997 because you're going to fall into a tax credit unit which is 60% AMI. Okay. So roughly $1,000 a month. Right. So roughly $12,000 a year. Right. And that would be for a one bedroom unit. Yep. Okay. And how many of those units do we have reserved? We have 140 which are 60% and below AMI. 60% and below. Okay. And Jason, just for clarity, these are the gross rents. What they do is they actually back out the utilities, the electricity. in the water. So this is the gross amount. That won't actually, what actually they'll be paying out of their pocket. They're going to back out what they estimated electric water sewage out of that amount. So that amount may be a little bit less there too. What's the total cost per unit to construct? About $318,000 per unit. More than the value of my house. Right? Yeah. Yes. Wow. Imagine what we can do with that amount of money if we decided to invest it in a place like the Lower Ninth Ward, which was once the beacon of black home ownership in the city of New Orleans. You know, but I'm going to, I'm going to pause there. I have a, I have a lot of questions and a lot of concerns, quite frankly, but I'm going to leave it there. I appreciate your presentation. Thank you. Thank you. Thank you. Any other comments from the dais? Council President Morrell. Yeah, I just really brief question. So I understand the pilot also captures the retail space as well, as I understand it. Yes. Yes. Well, it's the whole building. It's a whole building. Correct. But the, the, um, the sales taxes from the retail spaces will be, but that argument can be made for any building built in the city of New Orleans. So if someone builds a, if someone builds a store on magazine street, we get property tax and sales tax, right? So I appreciate that. That's a, that's a kind of insane argument to say that, well, you know, we get the sales tax, we get the sales tax from everyone. So that's not really a gift. My question is currently the pilot does not discriminate between the affordable units and the commercial rentals, correct? Correct. Why? I can give a little context in that.

So in the tax credit world, we have one investor that's investing into this deal and what they really like is a hundred percent affordable deals because their investors on the back end don't want to take the risk of us getting out of compliance, right? And so by us adding retail as a service to that component, it actually adds more risk to the deal for our financiers where we're underwriting in the market where we think we could get 25, $30 per square foot from a commercial. Our banker is only underwriting us to $11 a square foot and then taking into account a 30% vacancy. So they won't let us pick and choose, you know, the high value that we're adding to our service on the commercial versus, you know, the lower rents that we're charging in our basis. So it's a, it's a financial mechanism that we're using to make sure that we can hit our overall debt service on the property. Okay. Hit that for me again. So you're saying that the investor devalues the retail part. However, your argument is having the retail part helps you meet your debt service. Why wouldn't an investor evaluate that you are making sure debt service can be paid? They're hedging their risk, right? So the tax credit investor right now is a large bank, right? And the worst case scenario for them is we don't do what we say you're going to do. We don't do our compliance. And then they're all of their tax savings gets backed out, right? And so the worst thing that can happen for them is we go under, we don't, our commercial tenants don't show up. We've got high vacancy. We can't service our debt. And now they have a huge IRS penalty that they've got to recapture. So to hedge that risk, they discount our commercial rent significantly and increase our vacancy to make sure that they can sell that to their investors on the back end to be able to fund our deal. I understand generally. I mean, that's the risk every single investor has in any type of tax credit deal. I get that. But I guess the question for me is that being said, why not make the entire building affordable housing? I think that is a component of services in a neighborhood. We've got a larger master development, where I think that's good neighborhood planning to make sure that the folks upstairs can walk down and sit in the coffee and get a smoothie. The folks across the street. Do you have tenants for all these spaces already? We're out currently. So when you say that there'll be a pharmacy below, that's the hope, but they could also just not be a pharmacy below. It could be whoever is willing to pay the rent. Could be. Yeah. And I think this is a district wide, right? So this is a master plan. Our conversation with Shell, their employers, there are further phases of housing that are coming along. The convention center as a party to this and investing for their largest services, the port of New Orleans, all of those things that come into play. Retail made sense here to be a neighborhood advocate for long term. And I guess my assumption, and I say this out loud because it might be incorrect. This is essentially going to be the template for all of the Ravana projects, correct? Not necessarily. This is a higher density. It's a smaller lot. If you look at parcel one, it's a little bit less dense. We can probably go three story, smaller retail components. But this specific site is a lot more dense, different construction type. But from a position as a developer, the intent of the developers more than likely will be to not pay property tax on any of the housing properties in the Ravana district. That's the most likely scenario. But I think that would carry over for any ground up multifamily deal in the city of New Orleans today. If you look at most of the deals, you can walk to South Market, any of those components. It's interesting just because obviously, from my perspective, there's a different consideration when I look at different types of affordable housing projects. When you have developers who are in non-profits, for example, who when you look at how they structure their project, it's to make a project affordable, but also there's less of a focus on things like developer fees, for example. They just want to make sure the project makes sense and that it kind of nets to zero. That we aren't on the hook, but we aren't making money from it. This is not that kind of project. We are a non-profit. So Providence has joined the project with RD&I. RD&I is not a non-profit. They're not a non-profit. Providence is the 51%. We brought in Enterprise Community Investments. So they were the investor on our most recent Lafitte project. Which was a fantastic project. I was at that round breaking. I will say to Councilman Hughes' point, it is a bit jarring when you hear the cost per unit, generally speaking. There is certainly a lot of concern from a lot of policy makers that as those costs continue to escalate, number one, the federal government has been volatile as far as it comes to affordable housing spending. And though the reliance on things like state and federal tax credits has filled the gap for some point, it is beyond concerning to me that the cost of doing these developments continues to go up to a point that might not be sustainable. Because at the end of the day, if the federal government tomorrow decides that, I mean, we are at the whims of a federal administration on how much they will subsidize or underwrite affordable housing rents. We know from just recently dealing with a lot of our relocation of individuals who are homeless, that just as we speak, the Trump administration is looking at moving money away from housing to treatment. And so when I look at these kind of deals and I look at a lot of the assumptions that are made to make these deals work, a lot of the assumptions are based upon things operating in a way that is coherent and sane. And at the federal level, it is not coherent. So I have some concerns.

Can I add a few things? I think you're hitting on a really essential point in that setting aside the New Orleans landscape, which I think you're right, that when you look around the city, it's incredibly difficult to even do market rate development in the city. And I think we all collectively, the administration and the council, are consistently getting approached by developers looking for some kind of public investment. And I think when you narrow the universe down to the affordable housing developments, you've hit the nail on the head in that these are tax credit driven projects through and through everything that Council Member Hughes, you've asked about. And the sort of the risk environment that you're hitting on, Council Member Morrell, is entirely driven by the tax credit world. And as I know you're aware, that is not just federal risk, there's also state risk. These projects have to go through state bond commission where a lot of these very similar questions get asked and we know the politics that get played there. And when you look at this project, Tracy ran through this, this project is a four percent low-income tax credit deal. It has to go through a subsidy layer and review both locally and at the state level. And that actually caps developers fees per IRS and HUD regulation. So whether it's a for-profit developer or a non-profit developer, the developer's fee is actually capped. They cannot go above a certain amount. And what you still see, even with this project digging as deep as it can, there still needed to be six million dollars of public money, six million dollars of convention center money, and sixteen and a half million dollars of prime three money from the state in order to close the gap because of the amount of debt service that this project can support. And I think what you're hitting on is exactly right because we are literally at the point, and I say this is perverse, but this is actually true. At this point, the state of Louisiana and all of the cities that are trying to do affordable housing development have to effectively hope to get hit by a hurricane so that we have disaster community development block grant allocations in order to be able to close the gap in these projects. Without the prime three program, even with the federal low-income housing tax credit program, this project would have a 16 million dollar gap in it without prime three. That's that state DCDBG program. NSA would not have closed. W. Cooper would not have closed. Esplanade DeLeal, I believe, would not have closed. And so you are absolutely right that we are, we do not collectively have the resources that we need in order to be able to do these low-income housing tax credit projects. And yes, you are right, there are tweaks that we can make around the edges, but it is entirely driven by how these federal tax credit programs work. And this is one in the hand. I agree with you that we need to think very creatively about how we get off of this hamster wheel so that we can get more affordable housing at the singles and doubles level, all the way up through the larger multifamily level. I think two things I would say that need to be said out loud and cannot be discounted. One, the city is also bearing a significant amount of risk in projects like this. I think that there is always an emphasis on everything involved in this pilot is the best case scenario. And part of the reason why I think you see from some council members some skepticism is that we're all betting on the best case scenario, though there's a lot of obvious worst case scenarios kind of pending as we speak. The situation with the federal government regarding the housing for unhoused is very, very troubling just because if we continue to operate as if what has been done before is what will be done in the future and we don't change. And like I said to Councilman Hughes' point, the amount we're spending per unit is staggering. I mean, and part of what we have to do as policymakers is justify that, for example, in a pilot, we're foregoing property taxes on a large development and talking about basically zero property tax on a large development where we are building units at over $300,000 per unit. And the average New Orleans resident is looking going, I pay property tax on my house that's $125,000. And it is really absolutely necessary that there is an argument made in a coherent way, as Councilman Hughes said, that the average person understands why we are doing this, why it's necessary, and what is the long-term community benefit. Because when that person watches this video, when that person sees that we are doing zero property tax on a large-scale unit, on one hand, we certainly wanna promote affordable housing. It's why the people of New Orleans voted for the Affordable Housing Trust Fund. But on the other hand, we have a tremendous amount of employees who are on furlough. The number one way we reliably collect money in the city of New Orleans is property tax. And when they are saying, I'm a city employee, I live in a house that's worth $125,000, and I'm being furloughed and I pay property tax, and here is the council approving a project where the units cost over twice the value of my home, and they pay no property tax, there has to be a presentation made to us that explains that the overall benefit means that that person's gonna walk away after understanding, going, oh, I get it. Because right now, I'll tell you what's in front of us, that person doesn't get it. And I would encourage you, I do not believe this item is gonna be on consent. I think that what you need to do between now and full council vote is have that explanation because it was not made today.

I hear you loud and clear, and I think the citizens have the right to understand, and these Vitek transactions can be complicated, right? I think we wanna continue that conversation because I think there's some things that we can do in policy, there's some things that we can do together and collectively but I'll just talk specifically about some of the construction drivers on this project that we had to do to be competitive at the state level. The first of that is it's fortified, right? If we were to build this project in a regular piece of land, nobody would require us to be at a fortified standard, so that's an increased construction cost. One thing that these dollars came from was Ida, right? And what happened at Ida, we had a ton of affordable residents who had to stay in apartments with no power and no water for weeks. What's required in this project is that we have constant power generation, additional costs, as well as constant potable water. So those increased construction costs that drive up this space here were driven by federal dollars that came into Ida but are adding additional elements to low-income tenants they wouldn't have if not for those things in this project. So I just wanted to understand that those dynamics are here. These 20, 30% tenants who most of them don't have cars, don't have the opportunity to evacuate during a hurricane, can stay in a place that will have continuous power, will have continuous potable water, and the base flood elevation at their cabinet levels is maintained in a flood-type of scenario. Council Member Willard. Thank you. I want to go into, like, worst-case scenario, five years down the road, numbers aren't working. What happens in that situation? Because Council President Morrell was talking about the risk that the city of New Orleans takes on these affordable housing developments like Ravana. I can start, and you all can please pitch in. So to be very clear, the developer is obviously sharing in the risk. And what happens in these low-income housing tax credit projects is that all of the public investors in the project and the private investors, for that matter, require a compliance period. So these units are guaranteed to be at these affordable rates for, it's 40 years, right, 40-year compliance period. And, Jeff, that's what I'm getting at. So you guys wouldn't be able to increase rent? Correct, the rents cannot be increased. In the worst-case scenario that you're highlighting, Council Member Willard, where the project goes belly up, right, something happens and this development group goes away, there's a regulatory agreement that runs with the property. And so there's virtually no scenario, I can't say with 100% certainty, because nothing in life is certain, but with 99.99% certainty, this project is going to remain affordable. It might be a different developer and a different set of investors if this project hits that level of turbulence. But it will remain affordable. So what I was getting at is, like, if it comes out to be just financially unfeasible in whatever year, perhaps the development team has to declare bankruptcy. Is it possible that the rents can go to a market level? In almost no scenario. There's a regulatory agreement that requires it. I think, you know, there's, I think a lot of times folks cite the American Can example, and that was a scenario where it was the opposite of this, where the compliance period was only a 15-year compliance period. And so the... So that was after that 15-year period. After that 15-year compliance period. So this is a regulatory agreement. It runs with the land. It is not a part of, well, it's a part of the transaction, but it doesn't get unwound if the project goes bankrupt. Okay. And you guys said part of the tax credit deal includes an assumption of a 30% vacancy, right? On the commercial side. On the commercial side, not on the affordable housing side. Okay. Well, I wanted to know if there's a component that's not factored into the finances to account for if that 30% is occupied. Like, is there a potential upswing on that? And if so, what type of numbers are you looking at? I mean, I think it's TBD. I'll kind of go on the backside of first or the downside scenario, is what the financier requires is a personal guarantee or from us development team of that minimum standard, right? And so let's say there is a vacancy and for some reason that we're not able to pay that, us as developers have to step up and carry that. So I think the upside component of that is something that allows us to carry more debt service in a worst case scenario on the housing side, right? We're pretty thin in a regular standard. If I was to go do a regular deal, I'd want to be at least 1.25 on my debt service. On these affordable deals, they allow us to 1.15. So there's not a lot of room in cashflow for anybody because we've got a CDBG cashflow as well too. So I think that component provides us, I think, more of a hedge against some downturn on the residential component. Okay. I wanted to know, I was curious if the per unit cost breakdown on this deal is calculated in sort of a standardized way. Like if you compare the Lafitte Greenway project that was brought up, was the cost per unit on that project calculated the same as this project? Or is there any differences that were used to calculate it for this project? So that project, since it's more single family duplexes, was closer to about 550,000 per unit cost for construction. We usually calculate- Just for construction? Because that was my next question. Right. Or no, that was TDC. That was total development. So the number I gave you here was just for construction. Yeah, so you gave us, it's about 318,000 per unit for development costs, but then total cost per unit is about 477. That's correct. 477,000 per unit. So that's the total development. The 318 was the construction cost per unit.

There's a lot of financing and transaction costs given all of the local housing tax credit transactions. Yeah. Yeah, I think there are- Certainly, to Council Member Hughes and Morel's point as well, thinking about where we are as a city, I think we've all looked at population growth and making sure that New Orleans families are able to return to the city. I think that, again, this is entirely being driven by subsidy. This is where, if we could get other pots of money that are in any way at the same scale as what the Low Income Housing Tax Credit brings to affordable housing, you would see a lot more of singles and doubles and other types of affordable housing development in the city. I think because the Low Income Housing Tax Credit, since 1986, has been the major way that the federal government invests in affordable housing, it drives development to being in these multifamily settings. I think that it's something we want to figure out, how to develop more different typologies of affordable housing, but frankly, this is how you can get affordable housing built in the current environment. I mean, look, those numbers just immediately cause sticker shock. I know you guys are working with the hand that you're dealt, and everybody working in the affordable housing realm. I just don't see how this is sustainable, or even scalable. I mean, that's just a high price tag per unit, you know, for what is categorized as affordable housing. What's the maximum number of bedrooms in the Ravonna Project? Two-bedroom. So, the most you'll get is a two-bedroom apartment. I mean, I know y'all understand, we've had meetings about this, y'all understand where I'm coming from. It sounds like some of my colleagues have issues with it, too, or concerns with it, as well. My office is looking at other ways to approach it. I guess I would challenge y'all to do the same. My last question is related to, I guess, overall affordable housing in the city. I think there's five Ravonna Projects lined up, right? Three to four phases. Okay, so there's three to four phases. Earlier, you said that there's a component of units that will be market rate? Up to half of the units in the project. Okay, so this first phase is all affordable, but the next phase may be all market rate? Likely not all, but I think it's TBD. More likely a mixed income deal. Mixed income? Yeah. Okay, all on the same property? The same footprint. We've got about 30 plus acres there on site, so I think more than likely our next one is in parcel one, you see to the top, less dense, more in core of retail neighborhood type of things. And I guess what I would ask is, does the market rate mixed income project come with a pilot like this? I think it's TBD, depending on, yeah, going through an underwriting process. So this pilot won't govern all of the Ravonna Projects? No. So each one will come with a separate pilot? That's correct. That's one of the benefits of pilots is that they can be bespoke to a given transaction. And to Councilmember Morrell's point, if there's ways of getting creative to carve up a building or condo out a portion of it, subject to the pilot agreement, we can do that. If I can just go back to your previous point, Councilmember Willard, not to belabor it, but I think it's an essential point that Councilmember Hughes and Morrell also hit on. We understand the sticker shock, right? We understand this is a conversation that affordable housing developers and the affordable housing development community have day in and day out. This has been an issue at the state level, frankly, as I know you all are aware. And I think Mr. Meredith went through some of the things that drive some of those costs in multifamily projects that get those numbers up, right? These are very high-quality construction units. The alternative is let's say we were trying to get 220 individual housing units built, right? We want to build a single on an individual lot somewhere. You're looking at a comparable build level of, I would say, a minimum of $200 a square foot today. And so you quickly look at 1,500 square foot houses is easily $300,000 just on your hard costs. That's at the low end. And I would say that the driving factor here is that there's nothing like a low-income housing tax credit for an individual unit. You will occasionally see scattered site developments that will build 15 or 20 units. There's Blueberry Hill in the Lower Ninth Ward that has been successful, and that developer is trying to replicate that example. But you don't get anywhere near the economies of scale, and there isn't anywhere near the federal subsidy programs that drive these projects. And so that is why you see projects like these multifamily units, because that is the way right now that we can realistically get units at scale. We absolutely need to be doing singles and doubles. The Office of Community Development could not be more excited to be partnering with NORA and FNO. And I know you all are well aware, to implement the Housing Trust Fund, that's going to be $16 million going into fortified rooms, owner-occupied rehab, small rental repairs. But that's going to be impacting a couple hundred units max. When we do our Solve Second program, we spend $4 million a year. There's no guarantee that those units are affordable for any period of time. We put $60,000-plus into those units. And so I think you all are exactly right that there is no magic wand here. There's no solution. But what we need is an all-of-the-above approach when it comes to housing, in my estimation. And we need to be taking advantage of these programs. When the state and the federal government are putting these dollars on the table, we need to be really good about going and getting those dollars while we're also looking at these programs that can benefit singles and doubles.

But Councilmembers, you are hitting on the exact issue and the frustration that I think everyone who works in the affordable housing development community every day faces, where you get these eye-wateringly large numbers, you get the need. We've lost 30,000 people in the city since the pandemic. We need to be creating housing and jobs at scale. And I think what we're hitting on is diagnosing the problem. We need to be really creative all together to come up with those solutions. The fundamental question that I've been struggling with is, I mean, yes, we lost people. We need to get people back. We need to grow the city. We need to develop every corner of the city, really, frankly, if we really want to have a vibrant and robust economy. And I think everybody would, to some degree, agree with that. But as you develop the city and build on pieces of land that are, you know, undeveloped right now, ideally you want that to be generating some type of revenue. And if everything is on a pilot where we don't get anything, it actually makes it harder with the more people that you bring in because now you're essentially trying to do more with less because you have more people to provide services for. But, you know, I mean, I guess you can make the argument that your sales tax revenue is going to go up. But, you know, so that's like a fundamental struggle that I've had. What I would suggest is that you guys reach out to council members separately and sit down, run through the numbers with them, like you did with my team, before this comes back to the full council for a vote. Thank you. Thank you, guys. Appreciate it. Thank you. Any other cards? I just want to take a second bite at the apple if you don't mind. Okay. Thank you. Let me just say, Jeff, look, I appreciate everything you said, and I appreciate all of you. Look, I know these deals are complex, but you've got to realize I represent District E. And, you know, we have a lot of multifamily complexes that already exist. And so what my residents just don't understand, you know, something new and shiny going up around the city, they ask, well, why can't we just rehabilitate what already exists? Okay. So you're going to have to explain that to the people that I serve. Secondly, as an appropriator, and, you know, I take this job very serious. I know I'm not a member of the Budget Committee, but under the city charter, it's one of the three primary responsibilities that I'm actually elected to do, is to focus on the budget. And at a time when we're broke, let's just call it for what it is, at a time when our city's workforce is showing up every day, furloughed, when gas is sky high and groceries are sky high, it's going to be a really high bar. It's perplexing to me that we just keep, at a time when we're crime broke, we keep just foregoing property tax revenue. Okay. And the only solutions that people are coming up with to balance the budget is let's just tax the hell out of the people who are already struggling. That's just not going to work for me. And so, respectfully, your presentation today was just too academic. You're going to need to break it down in a way where the citizens of this city can really understand. Let's stop the fancy terms, and let's really break it down and tell the citizens, this is what the city is really foregoing, and this is the benefit. Okay. But for me, you're going to have a very, very high bar. I'm very skeptical today, and I'm very concerned as we try to get a grip on this budget. So thank you all. I look forward to visiting with you all in the future. Thank you, Councilmember Hughes. Let me just break down a couple things. Right now, this property, the River District, gets no taxes from it because it is owned by the Convention Center, which is an economic district of the state, so it does not pay taxes. If there's no development on this property, it will sit there, again, not paying taxes. Is that correct? I don't see an alternative use. The benefit of this development and foregoing taxes that we're already foregoing is 220 units of affordable and workforce housing. Is that correct? That's correct. As you said, resiliency measures, making sure that people can stay if there's a storm, storm water management, close to downtown, close to transportation hubs, close to jobs. Is that correct? That is correct. That's the benefit that I see in this project. So I hope my colleagues, when they speak to you offline, understand the benefit of having 220 units of affordable and workforce housing. I know I do. I've had at least three of my neighbors in Central City fall into homelessness because they cannot afford to live in the city of New Orleans. So that's the benefit of this project. And with that, I will take comments. Nicole Weber followed by Gary Crockett. And please limit your comments to two minutes. You need to say whether or not you're a paid person to be here. Nicole Weber, 2131 Bienville Street. I'm not paid to be here. I'm actually paying to be here as an investor and partner in the River District and in the Ravonna. I just wanted to point out, we talk a lot about optics, that we're giving up, that we're giving away. But the reality is, is that the voters have overwhelmingly supported housing trust fund, the bond sale. They've overwhelmingly supported affordable housing. They are demanding it because they're the people who live here. And let's not ignore the studies that have been done, the fact that Smart Asset determined last year, in order to live comfortably in the city of New Orleans, one individual needs to make over $85,000 a year. In fact, it's $86,445 a year. A family with two kids needs to make $201,000 a year, 200 grand they need to make in order to live comfortably in the city of New Orleans. We also need to be talking about the HR and A report that the council had commissioned that was done late last year that we have not been presented with.

It was done to talk about MIZ, the mandatory inclusionary zoning. But what it brought to light is that any type of development in this city needs to have some type of subsidy. And they break it down for you. The math is mathing. And we need to recognize the fact that reality speaks louder than optics. Thank you. Gary Crockett, followed by Terry North, followed by, I can't read your last name, sir, I think it's Alan. Adun. Gary Crockett. Yes. I'm Gary Crockett. I'm not being paid or I'm just representing myself. First of all, where does the housing go? Too many times here in New Orleans we've had affordable housing that go to Tulane students whose parents can afford over $40,000 for tuition, which means that they should be able to afford the housing as well. Will this housing go to true residents or will it go to transients? We have quite a few citizens here that have been waiting on housing for quite some time. There needs to be something in these contracts that say, well, you know what, this is going to go for those that are true residents here. There's a huge gap between the cost of these units and the actual financing cost. That is an issue for me as well. As far as $300,000 for the actual building cost, but the actual cost is going to be $500,000 overall. I didn't speak of what the retail cost is. At the end of the day, given there are a lot of unknowns as well, adding a nonprofit that doesn't bring value to the citizens doesn't mean anything to the residents, and that's who we all owe. They speak about an urgency of now in order to get this done, but the urgency isn't about the residents, and I think that's what we need to pull back and say what is going to be the true benefit of the residents. Ten jobs for $100 million doesn't make sense at all. We could actually definitely build even fortified homes at a lower cost here in New Orleans. I own a commercial construction company. I looked at these numbers, and there's a lot of money on the front end for development. Terri North, followed by Mr. Adun. Hello. Hi. I'm Terri North. I'm CEO of Providence Community Housing. I wanted to, and Providence is a 501c3, and we were brought in as the 51% partner on this transaction to bring it to fruition, and why did we get involved? 220 units of affordable housing. We haven't been able to get a hit like that in a very, very long time, and the folks that are going to live in these units that work in the CBD and work in the warehouse district, work throughout the French Quarter, will be in an area of opportunity. Earning $15 an hour will qualify you for a 60% AMI unit, and you'll be able to pay affordable rent. Making the rents affordable is really the key here, and we otherwise would be, in a market transaction, would be earning a lot more revenue and wouldn't necessarily need a subsidy or as much subsidy, but affordable housing, unfortunately, as you said, is very expensive to produce. It's not affordable to produce. It's affordable for the people who live there, and for 40 years, this will remain affordable. We are the operator. We're the main operator for 40 years. We've been a partner with this city since right after Katrina, been 20 years of doing this. We have over 2,000 units in New Orleans proper. We have 3,300 units throughout the area, and we are committed to affordability and operating good properties, and we need these folks to stay in this city and be able to thrive, and that's what we are about, so I hope that you all will consider that. Thank you. Thank you. Mr. Adun. Hello. Osadun here. 9217 Apple Street. I'll keep this brief. I just want to say thank you to Mr. Hughes and JPMorrell for looking at these scenarios holistically and breaking down the obfuscation that typically happens when people, or investors rather, explain payment in lieu of taxes. Looking at the opportunity cost of this development and the precarious situation of our city, the austerity, the increasing risk that we have to take environmentally, economically, in terms of just development in general, human development. As a resident of the city of New Orleans, it is difficult to see how this, given the context and the geographical segregation, to be frank, that our city is currently undergoing, it's difficult to see how this benefits the city of New Orleans from a people perspective. I guess I would recommend to maybe defer this until people grasp tangibly how this development will, I guess, pay dividends in lieu of another development. So yeah, that's all I wanted to say. Thank you. Thank you all for being here. Thank you for your work on this for the past two years. I'm excited about this project. I hope my colleagues understand the value that this project brings, including 220 units of affordable and workforce housing on a plot of land that pays zero taxes right now. The Convention Center could have easily done something else with this property, but they agreed with us contractually that 900 units of housing, 450 of which will be affordable, will be on this plot of land. Thank you for your work. Thank you for the information today. It was a class on pilots and economic incentives, but one that was greatly needed to educate everybody up here and the public. Thank you. All right. Thank you, Council Member Willard, for having us today. Yep. Motion to adjourn. Do I have a second? Second. All right. Meeting is adjourned. I'm sorry. We have one online comment. Oh. And what do you want to do with the resolution as it relates to the full council? Because I'm reading the enabling legislation. You guys have to consider it. So do you want it to go on the July 9th? Yes. Okay. All right. Thank you for the online comment. Just add it to the record. Okay. Thank you. Good. Thank you. Meeting is adjourned. Thank you, everybody. Thank you.