[StBernard] Old Twist on Rebuilding New Orleans

[Westley Annis]

Date: Oct 23, 2005 9:30 PM
Subject: Old Twist on Rebuilding New Orleans

http://www.latimes.com/la-na-reclaim23oct23,1,1112888,full.story?coll=la-sto
ry-footer 
THE NATION
Old Twist on Rebuilding New Orleans
Support is increasing for a proposal to use an arcane
legal concept to temporarily put badly damaged homes 
in government hands.
By Scott Gold
Times Staff Writer

October 23, 2005

NEW ORLEANS - Officials and community advocates are
quietly planting the seeds for an enterprising program
that could give the government temporary control over 
thousands of privately owned homes damaged by
Hurricane Katrina.

An increasing number of Louisiana housing authorities
believe the proposal, based on an arcane legal concept
called "usufruct," could be a key to determining 
whether New Orleans will again be a seminal American
city or whether it will stagnate with a population,
like it has now, equal to that of Duluth, Minn., and
Fort Smith, Ark.

Nearly two months after Katrina, the nation's 
attention has shifted largely to the "old city" - the
French Quarter, the Garden District - which was
relatively unscathed and is showing considerable signs
of life.

But New Orleans' future will be decided elsewhere, in 
neighborhoods that, while they were rarely seen by
tourists, were home to the bulk of the city's
residents. There, damaged homes sit empty for miles on
end, with no power, no water and no hint of recovery.

"The entire redevelopment of New Orleans rests on this
issue," said Mtumishi St. Julien, a longtime community
advocate, a housing advisor to Mayor C. Ray Nagin and
the executive director of the Finance Authority, one 
of the primary local agencies that administers
government housing programs. "We have a lot of people
who, through no fault of their own, do not have the
capability to come home and fix up their property. So 
our greatest challenge in redeveloping is acquiring
the land to rebuild."

The proposal would require deft legal maneuvering and
could be controversial, largely because the
Constitution severely restricts the government's 
ability to control private property. But New Orleans
is attempting to recover from a catastrophe, St.
Julien said - one that will require extraordinary
steps.

St. Julien cautioned that the program would not be a 
"silver bullet," but he said it could be a crucial
tool, among a spectrum of public initiatives, to
recover the housing stock in New Orleans, repopulate
the city and find housing for civil servants who make 
the city work.

"You are not going to rebuild New Orleans unless you
are able to get government access to private
property," he said Saturday. "If government does not
solve that problem, everything else is just talk. It 
is foolish to believe otherwise."

Usufruct is a centuries-old legal concept that gives a
person the right to use and profit from property that
belongs to someone else.

In Louisiana - in a relic of the state's unusual legal 
system, which is founded on Napoleonic code rather
than English common law - usufruct can apply to
private property matters. It is sometimes used here to
give a husband or wife control over property after his 
or her spouse dies. In lay terms, proponents of the
housing program want to give that control to the
government.

The proposal is in its infancy and would require an
act of the Legislature and a significant financial 
contribution - hundreds of millions of dollars, most
likely - by the federal government. But after
originating with a handful of New Orleans lawyers, the
idea has swept through the offices of housing
authorities and other government officials in 
Louisiana and on Capitol Hill, and is gaining steam in
many quarters.

The mechanics of the proposal remain uncertain but are
beginning to come together. It would work like this:

Authorities would locate scattered homeowners to 
determine if they have the means or the inclination to
rebuild. There are believed to be at least 100,000
homes in New Orleans that are damaged to the point
that they are not habitable. If the owner is not
planning to return anytime soon, local officials would
strike a deal.

The owner would sign over controlling rights of the
property - but not the title - to the government. In
most cases, that would likely be the city of New 
Orleans, but the program would apply statewide and
could involve numerous municipal or parish
governments.

Through contracts targeting hundreds of properties at
once, the government would then pay to make the home 
habitable again, while assuming, in most cases,
mortgage payments for the owner.

The home would then be rented out, first to displaced
"essential workers" such as teachers, police officers
and firefighters and their families, then to the 
public. Rents would likely be subsidized, and checks
would be written to the government agency that signed
the deal or to a company hired to manage the money.

The owners would be allowed to return after an 
agreed-upon period of time - perhaps three to five
years - provided they could repay the government for
repairs made. If, at that point, the owner did not
want to return or could not pay for the fixes, the
government would have the right to sell it. If the
house were sold, the government and the owner could
share in profits and losses.

The proposal would achieve several objectives,
advocates said.

Displaced civil servants living elsewhere or on cruise 
ships docked on the Mississippi River - separated from
their families in many instances - could find
reasonably priced housing. That could help, in
particular, in rebuilding the New Orleans Police
Department. 

Because the government would not technically own the
property, advocates believe the program would not
represent a "taking" of homes and could sidestep
constitutional questions. For the same reasons, the 
program would not require costly and lengthy court
battles that typically ensue when the government tries
to seize property through eminent domain.

Neighborhoods that would otherwise be left to rot,
meanwhile, could start to come alive. The dire 
situation in pockets of New Orleans that were
effectively destroyed has been compounded by a version
of an old real estate adage: You never want to own the
nicest house on the block. Even if an owner is able to 
rebuild, why proceed if no one else on the block is
doing the same?

"There is going to be a drag on the energy level of
folks wanting to exert their energy to restore and
rebuild if their neighbors' homes - or their former 
neighbors' homes - continue to deteriorate," said
Wayne Neveu, a New Orleans bond attorney who was an
originator of the proposal and frequently represents
local government agencies.

"It is a tremendous challenge to help those who return 
to feel comfortable and confident that the government
is supporting their efforts to return and is going to
exert energy to ensure that units don't remain vacant
and abandoned in a way that creates a disincentive to 
invest. This is a tool to do that."

The proposal has met with a welcome reception even
among some politicians and officials who consider
themselves advocates of private property rights.

"I would not want the city taking any liberties that 
did not involve the respect of private property
rights," said City Councilwoman Jacquelyn Brechtel
Clarkson, a veteran realtor and a strong proponent of
those rights. "But if it's a good plan, then it's 
wonderful."

Kim Hunter Reed, director of policy and planning for
Gov. Kathleen Babineaux Blanco, also welcomed the
proposal and said it could prove invaluable in
addressing the historic shortage of affordable housing 
in New Orleans - a dilemma that was compounded
exponentially by Katrina.

Clarkson, however, said she would draw the line at
voluntary arrangements. If the proposal called for the
government to force owners into contracts giving up 
control over their homes, she said she would fight it.

On that point, even the most ardent proponents of the
proposal have not agreed.

St. Julien said the program would likely be restricted
to voluntary agreements, partly because he fears that 
involuntary agreements could be construed as a
governmental taking, making it more likely that
homeowners could demand compensation before signing
over their rights to use their property.

But Neveu made no such promises, and said that if an 
abandoned home deteriorated to the point that it
represented a "threat to health and safety" - a
threshold already reached by thousands of homes - the
government could force owners to sign the deal. 

"In some cases, if owners are uncooperative . then
perhaps a more forceful implementation of receivership
or usufruct can be established," he said. "This tool
can be used for voluntary agreements with owners or 
for involuntary control by the city."

Alternatively, government agencies could resort to
more customary efforts to seize blighted property
through condemnation. Either way, efforts to seize
private property without the consent of the owner 
could anger property rights advocates.

Chip Mellor, president of the Institute for Justice, a
libertarian public-interest law firm that challenges
what it calls the abuse of governmental eminent domain
efforts, said the proposal had merit, provided the
government could show that contracts with homeowners
were "truly voluntary."

"Conceptually, if it is a voluntary transaction, then
there may be a role for the government to play in 
rehabilitating these neighborhoods," he said. "But the
minute you give the government the chance to condemn
property, you are opening the door for widespread
abuse."

While that contentious issue looms, other questions 
remain: How would the program factor in insurance
payments or government assistance already received by
a homeowner? Also, if the government is required to
compensate homeowners in some cases, how much is a
home worth if its neighborhood is effectively
uninhabitable? What if the bank or financial firm that
holds the mortgage doesn't want to go along?

"The devil is in the details," St. Julien said. But he 
said something must be done - and quickly.

He and his wife of 31 years, Shawishi, live in an
eastern pocket of New Orleans that isn't even on the
maps given to tourists at the airport.

It was there that the couple built their first home, 
raised three children and filled an empty nest with
toys for the grandkids. Their home was a congenial
slice of suburbia, with an imported palm in the
circular driveway, a display case in the foyer full of
diplomas and the kids' sports trophies.

Katrina sent chest-high water crashing through the
living room. Today, black mold is creeping toward the
ceiling. Outside, the air conditioning unit was
uprooted and tossed on its side. The kitchen counter 
was bowed and contorted like a massive bowl.

"Look at what it did to the piano," St. Julien said,
his shoes squishing an inch deep in the soggy carpet.
"It just picked it up and flipped it over." 

St. Julien is, for now, homeless and working out of an
office in Baton Rouge. He could likely fix up his home
- unlike tens of thousands of others who are
impoverished and did not have insurance. But even with 
the means, he said, he is paralyzed by uncertainty.

Will the protective levee system around New Orleans be
rebuilt so that it can withstand another Katrina? If
not, why rebuild? What happens if he sinks money into 
his home, only to find that the government changes the
flood maps, eliminating his ability to get insurance
or requiring that his home be hoisted onto stilts?

"There are so many variables. Do we roll the dice?" he 
asked. "I don't know if we're renovating or
demolishing. I don't know what to do, and it's the
same with every owner in every area affected by the
water. I'm lost. We're all lost."