Pres Kabacoff clarifies the problems the city is having with accommodating its lowest-income families.
In an August 27 piece, ”Why Louisiana Fought Low-Income Housing in New Orleans After Katrina,” CityLab explored the city’s challenges with reproducing adequate housing for very low-income families during the recovery. One of the figures at the center of that still-unfolding saga is Pres Kabacoff, CEO of HRI Properties, the real-estate development company responsible for building most of the large-scale apartment complexes around New Orleans. HRI has about 26 of these, containing 2,862 apartment units in New Orleans, about half of which they consider affordable, according to a portfolio the company shared with CityLab.
It’s for this reason that you can’t really discuss affordable housing in post-Katrina New Orleans without talking about Kabacoff: He’s the city’s primary supplier of the stock. In fact, Kabacoff fundamentally changed how “affordable housing” gets talked about in New Orleans. Before Katrina, it meant living in one of the public housing complexes designed for the very lowest-wage workers. Or, for those who made a little more money, it meant renting half of a shotgun house from a private landlord—who most likely lived on the other side of the shotgun.
Today, it’s more difficult to distinguish among renters of any income because the city has abandoned public housing. Tenants now live scattered across housing developments where people from a range of incomes dwell. Kabacoff began taking the city’s low-income housing agenda in this direction before the storm, and now it is the norm. This change hasn’t come without controversy, though, since only a fraction of the city’s previous public-housing stock has been rebuilt within this new mixed-income maze. Most pre-Katrina public-housing families now have vouchers to use on rental properties in the private market, but that hasn’t exactly been a panacea given rampant discrimination from private landlords.
Kabacoff has been the focus of much criticism that his mixed-income housing agenda might be leaving many poor New Orleanians worse off than they were before the storm. It didn’t help that, in an interview with Gawker earlier this year, Kabacoff was quoted as saying that developers should just get rid of very low-income tenants—“Just get them out of there”—which played right into a lingering perception held by many that public housing tenants were intentionally kept from returning to the city in the post-Katrina recovery.
Kabacoff says that Gawker quote was taken out of context. He tells Citylab that he is “very sensitive” about these issues and pointed, as evidence, to his involvement in Smart on Crime Louisiana, a coalition of business leaders looking to reduce mass incarceration. In our interview below, Kabacoff further explained his feelings about how to accommodate low-wage households, and how to address the affordable-housing crisis in general.
Your exact quote from the Gawker interview, about households in the lowest third of incomes was: “So what do you do with the third that's too difficult? You just don't take them, or you evict them. Just get them out of there. I don't have the staff to deal with them.” What did you mean by that?
Either I was being very inarticulate or they misquoted me. When you deal with [that] one third of former public-housing residents, you have to be very cautious about not bringing in a criminal element that you can’t handle. if you interpret that to mean that you want to get poor people out of public housing, well that’s not what I meant. It just means you have to do careful screening, you may have to do some evictions, mainly making sure that you don’t have that criminal element living next to the market rate, because the market rate will [leave the housing development]—as will many public-housing residents.
You understand, though, how people may have read what you said differently—especially given the post-Katrina context, where many believe that poor, public-housing families were not welcomed back to New Orleans?
To say it's a conspiracy, I just don’t buy that. Look, we have a real problem in the city. With public housing, when you take it down you eliminate a problem area, which could have a positive impact on the city. For former public-housing tenants, they can live in a mixed-income neighborhood and their lives will be better. Those who don’t get to return to mixed-income housing, you get a voucher. So when people say that when they tore down the public housing you took away people’s only places to live, that’s not true, because you have a voucher now to live in a neighborhood of your choice.
The more serious problem is that if the housing authority ever reopened its rolls—which has a waiting list of over 18,000 people on it between public housing and Section 8 assistance—if they reopened those rolls, there could be as many as 55,000 more people looking for assistance. So we can question whether HRI Properties did a good job with mixed-income housing, but that discussion is all on the margins because the bigger picture is that we have an affordable housing crisis, which can only be resolved at the federal level. Congress has decimated the budget of HUD, but [private developers] need a greater deal of incentives, either through more tax credits or through direct subsidies as they did with Katrina.
You take credit for changing the rules around how housing subsidies are applied so that more people would qualify for affordable housing. Explain what you did.
Three days after Katrina, 60 percent of HRI employees had lost their homes, so we decamped to Houma, Louisiana. where we had some apartments and relocated our office and found places for our people to live. Our president and I, three nights after Katrina, we wrote up a budget asking the federal government for additional funding for housing, schools, economic development—we ended up asking for about $8 billion, which we woefully underestimated. We were concerned that the federal government would send housing money to the state and use that money to rebuild public housing as we knew it, so that we’d end up with concentrated poor, and more of them than you had before.
Our solution, since our mission has always been mixing income, which is what everybody believes today, we decided that we would go to Washington, D.C. and try to increase for Katrina the minimum you could make and still afford to live in mixed-income housing. Because if all you made was $30,000 [to qualify for low-income housing] then there was a whole group of people in the city who were making $60,000 who would be good candidates for mixed-income housing, but we would need to expand the base.
Well, that didn’t work. We went to Washington and the affordable-housing groups were concerned about messing with their [subsidy] programs. So we went back to the state and said [it] ought to carve out some money for mixed-income housing. And they did, they took $12 billion out of Road Home [a fund created from Katrina disaster funds to help families rebuild homes] and put a $600 million “Piggyback Program” together, which was designed to supplement the financing gap needed to create mixed-income housing. That provided the gap subsidy that allowed for the completion of all of [city’s public housing projects].
How do you respond to the pushback that this may have ended up subsidizing some higher-income people to come back to New Orleans to rent at the expense of low-income people who had greater housing needs?
That’s a legitimate discussion. In a city like New Orleans where construction is very expensive because of the amount of construction that we’re doing and the insurance costs are very high, you need subsidy even for the market-rate side. And the reason for that is that a market-rate renter will pay, let’s say, $2 per square foot a month—so for a 1,000-sqaure-foot apartment, that’s $2,000—to live in the Warehouse District, which is mostly market-rate. So with $2,000, if that same market-rate person is going to live in a just-as-nice as apartment in [the former Iberville public housing projects], which is wonderfully located near the French Quarter—they won’t pay $2, they’ll pay about $1.40. They’ll pay $1,400 there because it's a mixed-income community and there’s some issues with that. I don’t want to be misquoted here, but that’s just reality. And so you have to subsidize; in order to create mixed-income, you have to subsidize even the market-rate renter.
So, because certain market-rate renters have issues with living in mixed-income communities, we basically have to subsidize their anxieties around living with lower-income tenants?
I don’t know how else to say it.
And this is because of the criminal element you spoke of earlier? Could you expand on that.
We don’t have the staff or the dollars to handle people with severe criminal problems or who would conduct criminal activities on the premises, or who have a mental handicap so difficult that you just can’t handle them on the project. We have created a nonprofit to help tenants if they have problems on the job or at home. We carefully screen [for possible criminal backgrounds] but we don’t automatically reject a tenant’s application just because they have something on their record. We look at the crime and evaluate it just to make sure that they are not a threat to the neighborhood. But this is an issue that only the government can handle because it's a social issue. Unless you give private developers the funds to deal with that, the private side can’t do it on their own.
Then why involve the private sector at all?
The public side was not handling it, either. It’s not being handled. People with mental problems—[the state] eliminated funding for mental health. We use our prisons to handle mental health, and that’s not good. I don’t think it’s appropriate to turn to me, Pres Kabacoff, as a private developer and say, “Solve that problem.” The overall benefit to the community is to create mixed-income housing. And at the end of the day it’s not perfect, but I think we’ve done a nice job.
This interview has been condensed and edited for length and clarity.