It may seem a stretch to compare steamy New Orleans with often snowbound Ithaca, N.Y., but the similarities caught the attention of Matt Schwartz, principal of New York-based Domain Cos., which is building a $100 million mixed-income housing development in the flood-ravaged Louisiana city.
“Some people find it funny when I first mention it,” says Schwartz, whose firm, co-founded in 2003 with Chris Papamichael, currently has 1,500 housing units valued at $250 million in development in New York State and Louisiana. “We've definitely seen a lot of parallels between Ithaca and New Orleans.”
Both cities have major research universities that spawned biotech corridors and attracted well-paid professionals. While other Upstate New York areas suffered economic slumps, the healthy micro-economy around Cornell University and Ithaca College buffered the city.
Schwartz saw opportunity in New Orleans, where a medical corridor of hospitals and institutes fans out from Tulane Avenue. The developer, a 1999 Tulane University grad, says it ranks 10th among private universities in attracting biotech licensing revenue.
Louisiana State University and the Department of Veterans Affairs are building a $1.2 billion medical complex to replace the Charity and VA hospitals flooded following Hurricane Katrina in 2005. The $94 million Louisiana Cancer Research Center is also underway.
“We realized what research institutions can do in terms of sparking the development of new businesses and high-paying job creation,” explains Schwartz. The 183-unit Preserve Apartments and 228-unit Crescent Club are part of a surge to ease a severe housing shortage.
The developments represent a milestone for New Orleans, says Wil Jacobs, housing policy director for the Louisiana Recovery Authority, which coordinates the state rebuilding effort. “These units are being constructed in the heart of New Orleans, in an area that had been bereft of development for the last 30 years.”
The units will house workers for the medical complex, where 10,000 jobs are being created, Jacobs says. The state lost at least 82,000 rental units and its programs are helping rebuild 35,000 units.
Developers face challenges from lending restrictions to soaring insurance rates (please see story, p. 75). One developer's yearly premium soared from $8,000 to $41,000 after the floods, says Thomas LaTour, a state disaster recovery specialist. Officials offered developers like Domain incentives including zero-interest loans.
The two Domain projects, with amenities like putting greens and computer centers, are being built with $36.7 million of housing tax credits through the Louisiana Housing Finance Agency (LHFA) and $35.5 million in Community Development Block Grant funds through the Louisiana Office of Community Development. About 60% of units will be rented at market rates, and 40% to people earning about $35,000 a year or less. Completion is targeted for late 2008.
The mixed-income housing plan met resistance, says Calvin Parker of the state Office of Community Development. “There were a lot of naysayers,” but 33 projects are underway. “So, it is working.”