[StBernard] St. Bernard Parish scraps redevelopment plans for Village Square tract

[Westley Annis]

St. Bernard Parish scraps redevelopment plans for Village Square tract
by Chris Kirkham, St. Bernard bureau, The Times-Picayune 
Sunday May 24, 2009, 9:29 PM

Blighted before Katrina and vacant since, Village Square is in the heart of
Chalmette. After nearly four years of government attempts to buy and
rehabilitate a 37-acre tract of overgrown lots and ungutted apartments in
the heart of Chalmette, St. Bernard Parish is back to the drawing board in
negotiating with more than 100 landlords in its largest patch of blighted
property. 

After several attempts that came up short, the parish's redevelopment
commission has scrapped plans from earlier this year to combine public and
private dollars to buy the Village Square tract and encourage new
development in its place.

The buyout will still move forward, but the parish has decided to focus on
simpler incentives to encourage empty green space instead of commercial real
estate investment, leading to a philosophical divide about what the future
holds for the area. 


As a result, the parish's private redevelopment partner, CBO Financial Inc.
of Maryland, walked away from completed buyout negotiations this month with
more than 80 property owners -- almost three-quarters of the entire tract.
The delays have left frustrated landlords in limbo and kept vacant eyesores
standing for years. 

Instead of a plan that aimed to combine green space and commercial
redevelopment on the Village Square footprint, the parish is primarily using
FEMA money that will permanently prevent development on much of the land.
Concerns about buying out all the owners and having enough money to reinvest
caused the parish to abandon the targeted redevelopment effort in favor of
the green space approach in recent weeks. 

Money comes from the hazard mitigation grant program, a federal incentive to
prevent property damage in vulnerable areas such as flood zones. It is a
voluntary program, meaning there could be pockets of green space and pockets
of development throughout the area. 

Another option 

Though redevelopment on the land would be largely impossible under that
approach, Parish President Craig Taffaro said it is a much better option
than the status quo. 

"The ultimate goal would be to have the property in a position that allowed
us to redesign it and redevelop it in a way that would be productive for the
long term," he said. "But that only is secondary to acquisition first.
Acquisition is the absolute primary goal, and has been since Hurricane
Katrina." 

Some Parish Council members have said they feel St. Bernard is missing out
on an opportunity to shape long-term development in an area that had fallen
into serious disrepair long before Katrina swamped it. 

Councilmen George Cavignac and Wayne Landry had pushed to use the Village
Square land as a site for the parish's first post-Katrina hospital. Because
the area is designated as a low-income census tract, a $58 million hospital
investment in the area could generate more than $6 million in additional
revenue to use for construction of a medical office building on the site,
they said. 

The parish's hospital service district board in February chose another site
in Chalmette donated by the Arlene and Joseph Meraux Charitable Foundation. 

"It's a patchwork, non-common-sense approach on the land that won't do
anything for sound economic development or revitalizing the adjacent area,
which is the smart thing to do," Cavignac said. "We have the chance to lift
up a long-declining area, in decline since the '70s. Doing it the right way
wouldn't slow anything down." 

Landry and Cavignac, who last week were voted by the council onto the
hospital board, say Village Square is still a viable alternative to the
Meraux Foundation site, which sits across from Chalmette Battlefield off St.
Bernard Highway. But Taffaro said the Village Square area once considered as
a hospital site must be offered up as a FEMA green space property before a
June 1 deadline. 

Changing plan 

The current plan for Village Square differs markedly from one agreed to just
four months ago, which involved a combination of green space and a ring of
commercial development along Oak Tree Lane, Southern Place, Plymouth Drive
and the eastern side of De La Ronde Drive. 

Under that version of the plan, the parish would have partnered with a
private investor, CBO Financial Inc. of Maryland. A subsidiary of CBO,
Village Square Redevelopment LLC, would buy up the entire tract from the
property owners and then sell nearly 70 percent of it to the parish in
exchange for the FEMA green space money. The rest of the acquisition costs
would be covered with $6 million in Community Development Block Grant money
pledged by the parish. 

The transaction would have generated an additional $4 million from a U.S.
Treasury tax-credit program aimed at rehabbing low-income communities, which
CBO could have used for future development on the site. 

But problems arose last month when Village Square property owners started
receiving letters from a parish contractor, Global Risk Solutions, about how
much they could receive directly from FEMA as opposed to taking CBO's offer
of $8 per square foot. The FEMA program gives landowners the pre-Katrina
value of their property, minus any insurance proceeds, in exchange for
handing over the property to the parish for permanent green space. 

Property owners who were insured might not be interested in the offer, but
those who did not get insurance payments could potentially receive much more
than the $8 per square foot. In addition, state officials informed St.
Bernard that the $6 million in block grant funds might not be enough to
cover additional property-acquisition costs. 

So with more than 80 properties set for closing, CBO let the contracts
expire this month and is now sitting on the sidelines. 

"Obviously we don't have a problem with them making a decision that's most
advantageous to the people down there, but it's just causing us to wait and
see what happens," said Dmitri Wasilewski, vice president of projects and
development with CBO Financial. "Everything had to come together at the
right time, and in January it looked like that was happening. Obviously some
of the stars didn't line up, and that's business." 

Seeking advice 

The parish redevelopment commission has decided to hire a planning expert
for advice about redevelopment once the amount of green space is set.
Taffaro said there is a possibility of using the block grant money to
redevelop an area of storefronts along Judge Perez Drive just south of the
apartments. 

At this point, the green space buyout is the lone incentive being offered by
the parish at Village Square. The program is voluntary, but many property
owners in the area have had few options since Hurricane Katrina. A series of
parishwide construction bans for large apartments immediately after the
storm, and again last year, prevented owners from rebuilding. 

And the parish has continued to make overtures about buyouts for years,
drawing complaints from owners who feel they have been strung along. 

"What irritates me is that I've lost rental income, my buildings are missing
and I have land that I can't do anything with, because I'm at the parish's
will," said Omar Hamide, a landlord who once owned 31 units in Village
Square and now has six slabs to his name in St. Bernard. "Every time I try
to get out, they pull the plug." 

The only other option would be for owners to rebuild, now that a federal
judge has ordered the Parish Council to lift the apartment-building ban. 

Out of 104 properties in the area, 18 have reached a deal on the green space
plan. Another 54 have expressed interest, and the parish is awaiting a
response for 31 others. One landowner has refused to take the buyout. 

Chris Kirkham can be reached at ckirkham at timespicayune.com or 504.826.3321.