[StBernard] State and St. Bernard Parish tussle over sale of Hurricane Katrina-ravaged lots

[Westley Annis]

State and St. Bernard Parish tussle over sale of Hurricane Katrina-ravaged
lots

Published: Monday, June 25, 2012, 5:44 PM     Updated: Monday, June 25,
2012, 5:44 PM

 By Benjamin Alexander-Bloch, The Times-Picayune 

Neither the cash-strapped state nor St. Bernard Parish wants the financial
burden that will inevitably come with controlling the 2,400 Hurricane
Katrina-ravaged vacant lots that still dot St. Bernard. But the state, which
currently holds the properties and is paying about $400,000 a month to
maintain them, has leverage because the parish wants a say in how the lots
are sold and what development restrictions are placed on them.

In turn, the state on Friday threatened to hold an auction in August to sell
about 275 of the properties unless the parish takes them off the state's
hands. Immediately, the Parish Council called a special meeting and this
afternoon passed a resolution imploring the parish attorneys to explore any
options the parish has to either stop that auction or place minimum-bid
restrictions on auctioned lots.

Both the state and the parish face major financial woes this year. The state
is working to plug a $220 million revenue shortfall for the current fiscal
year, and the parish expects to fall about $15 million shorter than
anticipated this year due to declines in sales tax revenue.

Victor Franckiewicz, general counsel for the Louisiana Land Trust, which is
the non-profit for properties acquired by the state under the Road Home
program, said today that the Land Trust likely would list the properties at
much less than fair market value.

St. Bernard Parish Council President Guy McInnis responded that the 275 lots
selected for auction were specifically chosen by the Land Trust because
people had expressed an interest in purchasing them at fair market value.
McInnis and Councilman George Cavignac suggested that if an auction must
happen, they would want to place minimum-bid restrictions on the lots.

But Franckiewicz said that the psychology of auction bidders at other Land
Trust auctions suggests that listing the property at less than fair market
value draws in more bidders, which likely would drive prices higher due to
the competition.

The Road Home purchased the approximately 4,500 St. Bernard lots with U.S.
Department of Housing and Urban Development's Community Development Block
Grant funds.In turn, the parish, the Louisiana Land Trust, the state's
Office of Community Development and the U.S. Department of Housing and Urban
Development must sign off on the parish's proposed three-year redevelopment
and disposition plan for the lots, along with a proposed cooperative
endeavor agreement.

The Parish Council is expected to approve the disposition plan and the
cooperative endeavor agreement at its regularly-scheduled July 3 council
meeting, but each could still take until late summer to become official.

Less than two hours before the parish held its 2 p.m. special council
meeting today, Land Trust Executive Director Michael Taylor sent an email to
the council and parish executives and staff members explaining why the
auction is necessary.

"The simple answer is that the LLT is incurring about $400,000 in monthly
maintenance costs with zero budget beyond June 30, 2012, only six days
away," Taylor wrote.

In terms of waiting for the disposition and cooperative endeavor agreement
to become official so that sales would follow mutually agreed upon plans of
action, Taylor said the state must act sooner.

"Even if everyone agreed to a new disposition plan and CEA today, the lead
time for moving through the sale, title examination, and closing process
means that we would not start to draw down the LLT's inventory until late
summer," he wrote. "By that time, we incur an additional $1.2 million in
maintenance costs."

C 2012 NOLA.com. All rights reserved.