Entry for January 16, 2007

Winning design for Green USA competition.

Google news referred me to today’s Daily Dish at the San Francisco Chronicle where I read that Brad Pitt and Angelina Jolie had moved into the French Quarter and that

Construction is set to start this month on the 20 environment-friendly homes Pitt jointly commissioned with Global Green USA.

Global Green, which compiled the Green Bulding Guide for Louisiana Developers at the behest of the Louisiana Housing Finance Agency, announced the contest April 20, 2006 and announced the winning design Greenola on August 31: Workshop APD of NYC’s Matthew Berman and Andrew Kotchen, which

will be built in the Holy Cross Neighborhood of the 9th Ward….Thanks to a generous $100,000 contribution towards the purchase of the land in Holy Cross from Trizec Properties Inc, Global Green will be able to begin the process of acquiring the land … [for] the development which will include a 12 unit multi-family housing building, six single family homes and a community center.

I decided to turn to the Times Picayune. Today’s story by business writer Rebecca Mowbray was “High costs threaten housing plans: Developers saying tax credits too little.”

Dozens of proposals for affordable housing complexes in the New Orleans area are at a standstill because insurance and construction costs are so high that even housing tax credits issued through the Gulf Opportunity Zone Act aren’t enough to make the projects feasible financially.

The Louisiana Housing Finance Agency has awarded $121.6 million in tax credits to 97 projects in Orleans, Jefferson and St. Tammany parishes to build 11,162 units of affordable and mixed-income housing. But developers say that with insurance costs having risen from 200 percent to 600 percent on apartment complexes since Hurricane Katrina, tax credits aren’t enough to plug the gap.

Developers who win tax credits finance their projects by selling the credits to investors, who often pay a premium on the credits, allowing the developer to turn $1 million in credits into $10 million in equity. In exchange for getting the valuable credits, developers agree to lease a number of the apartments at reduced prices to people who earn less than 60 percent of the area’s median gross income.

Despite the power of the tax credits, the insurance problem is so serious that many of the much-heralded housing tax credits might go unused.

January 9, David Abbenante, president of the Apartment Association of Greater New Orleans, at the annual meeting of the Louisiana Association of Business and Industry in Baton Rouge, told audience members,

You’re finding that many of the credits that have been awarded to developers, they are not going to be able to finance them,” . “There’s a question about how many of those will actually be built.

Under the terms of the Gulf Opportunity Zone tax credit program, projects must be in service by the end of 2008 to qualify. Developers must prove they’ve got their projects together by March 31 or lose the tax credits. Many are calling for Congress to extend the 2008 completion deadline for tax credit projects to 2010. Some want a federal catastrophe fund that would back up insurers facing large claims. The Louisiana Housing Finance Agency plans to hold a special public meeting of its multifamily committee within the next month to examine insurance solutions with the developers, the Louisiana Department of Insurance, Citizens and the Louisiana Recovery Authority. The agency is looking at ways to recycle unused tax credits back into viable deals, use additional Community Development Block Grant money to plug gaps in apartment deals or increase the reach of the Louisiana Citizens Property Insurance Corporation.

Kelly Longwell, a New Orleans lawyer with McGlinchey Stafford has clients with eight apartment tax credit deals that were supposed to close before the end of the year. Only one did. She told Mowbray,

Even though the tax credits have been very lucrative, they are not making up the gap for the increased insurance costs and the increased construction costs. Deals didn’t close. The LHFA is going to have to step in.

Tim Leonhard, senior vice president of loan originations and tax credit equity investment for CharterMac, a publicly traded real estate firm that finances affordable housing projects by selling the tax credits is interested in about 16 of the two dozen local apartment deals that have crossed his desk, but none has been able to close. Of the 16 projects, eight will probably get knocked out by insurance.

Only the strongest of the strong property owners, those with the deepest pockets, are going to be able to get deals done.

Charles Fontenelle, an insurance agent at Fontenelle & Goodreau Insurance in Metairie told Mowbray,

I’ve got about 20 deals on my desk, and we’re just waiting. The wait is because the insurance costs are too high. We tell them what the numbers are today, and they go back to the lenders, and they say, “We can’t approve this because you’re not going to make any money.

Meanwhile the developers are hoping that the median income of the city will increase because many of the city’s poorest residents have yet to return. If the median income rises, rents deemed affordable by tax credit guidelines will rise. Said Abbenante,

A lot of people are betting on that [happening]. If it doesn’t, it’s a mess.

So here’s my question: if the poor need to stay away and the government is to assume the expense and the risk, why private developers who expect to reap a huge profit. Isn’t this just more corporate welfare? More power to Green USA and to other non-profits such as Habitat for Humanity, which has already put folks in homes and is planning to build hundreds more in 2007.

*

My written comment to the FCC (see yesterday’s entry)

RE: Docket No. 06-121, the review of the FCC’s media ownership rules, please do not relax or eliminate the public interest limits on media ownership. Please rule in the public interest on this matter by preserving the FCCs Broadcast Media ownership rules: the Television-Radio Cross-Ownership Rule, the Broadcast-Newspaper Cross Ownership Ban, the National Television Ownership Rule, the Duopoly Rule for Radio, the Local Television Ownership Rule, and the Dual Network Rule.

Informed debate and discussion of current events, both locally and globally, a fundamental requirement of our representative govenment requires the sharing of information, which can be lessened when the media is restricted to only a few owners: multiple information sources controlled by a single voice provide an illusion of variety.

Three years ago, members of the American public spoke out in opposition when the FCC tried to relax ownership rules. Nothing has changed: rather than allowing further cnsolidation, the U.S. should instead be encouraging the creation of more local, community controlled media outlets.

I am glad that you
allowed an extension in time to make comments. Regarding your awarding of study contracts, I am curiious as to the amounts of the contracts and how you picked your contractors. For instance, I note that the Minority Ownership studies on barriers to entry will be authored by Allen Hammond, Santa Clara University and Barbara O���Connor ,California State University, Sacramento.

Both Hammond and O’Connor are affiliated with Alliance for Public Technology (APT), which receives major funding from various telecommunications companies. The organization is a client of Issue Dynamics, Inc.(IDI) , Washington, DC-based firm that organizes pr campaigns that partner corporations with NGO’s to “advocate in support of causes that the companies support” according to Sourcewatch. “Its work has angered some consumer activists, who say IDI often does not disclose whom it is working for and argue that IDI’s work amounts to astroturf PR.” Additionally, Teletruth���s Bruce Kushnick in ” Bell SkunkWorks 101: A Look Behind the Curtain. Connect the Dots or be One of the Disconnected.” notes that the Executive Director of APT, Sylvia Rosenthal , is also Assistant Vice President of Issue Dynamics Inc. The firm’s site says that she does so “IDI’s management contract.”

In “Snow Job in Washington : Telecom giants are pulling the strings at many ‘user’ groups,organizations that should represent your interests,” which appearred in Network World on 1/26/98 , David Rohde writes of APT:

“The group’s chairman, Dr. Barbara O’Connor, bristled at the suggestion that the alliance is a front for anything, noting that it has even held a seat on the FCC’s prestigious Network Reliability Council.

“But of the alliance’s $190,000-per-year budget, approximately $100,000 is supplied by the regional Bell operating companies, she said. Not surprisingly, last October, the alliance wrote the FCC in support of BellSouth’s South Carolina long-distance application and has consistently supported other RBOC policy positions.”

Glenn Fleishman. in February 8, 2005, entry Wi-Fi News “NMRC Pulls Its Board of Directors Page” notes that before New Millennium Research Council removed the page listing its board of directors, both O’Connor and APT board chairman Karen Buller were listed as board members and that the “NMRC was behind the report that came out last week agitating against municipal broadband; they are owned by IDI.

The idea that members of an astroturf group, or at least a group that has promoted the industry’s position over that of the consumer is troubling.

Additionally, the study, Station Ownership and Programming will be authored by Tasneem Chipty, Vice President for Economic Litigation, CRA International, an anti-trust consultant to many industries. News Coverage of Cross-Owned Newspapers and Television Stations will be authored by Jeffrey Milyo, University of Missouri, a senior fellow at the consrvative Cato Insitute, not an organization known for its advocacy for all consumers.

The FCC’s reputation was recently tarnished last September by the revelation of unreleased reports. (See my article, “Previously Unreleased FCC Reports on TV Localism Raise Questions About Media Diversity” at http://www.llrx.com/extras/tvlocalism.htm).

Public interest groups have presented convincing evidence of the ill-effects of media consolidation in its October 23, 2006 Compendium of Public Interest Research on
Media Ownership, Diversity and Localism (http://www.hearusnow.org/index.php?id=813). It is time for the FCC to protect the interests of the general public and promote broad ownership of the industry.

Sincerely yours.
Beth J. Wellington

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