Millions spent on upkeep of empty Katrina-damaged lots

NEW ORLEANS -- More than 3,000 lots flooded by Hurricane Katrina and bought with federal money in an emergency bailout sit idle across this city -- a multimillion-dollar drain on federal, state and city coffers that lends itself to no easy solution.

An Associated Press examination of the properties sold to the government by homeowners abandoning New Orleans after the catastrophic 2005 flood has found that about $86 million has been spent on 5,100 abandoned parcels. And there's no end in sight to maintenance costs for perhaps most of the 3,100 properties that remain unsold.

This portfolio of urban wasteland and blight represents part of the storm's difficult legacy that persists nearly seven years later.

And with federal funding for maintenance running out, there's concern the lots could fall into deeper neglect when this cash-strapped city is forced to pay for upkeep and that they could contribute to New Orleans's staggering blight. At last count the city found an estimated 43,000 blighted properties, according to a city-sponsored analysis of U.S. Postal Service data.

"Right now nobody on those 3,000-plus properties is contributing. It's costing the city and state government to maintain them. Police got to go out there, run kids out of there, drug-users," said Errol Williams, the tax assessor in New Orleans. "That's a cost to the city. If they sell one, it comes back on the tax rolls, I'm happy."

Until now, the properties have been managed by the Louisiana Land Trust, an agency set up using federal funds.

Jeff Thompson, a land-use lawyer on former Mayor Ray Nagin's rebuilding team, said the city needs to be creative. "Maybe they should make them into ponds to store water. Make them into parks or community gardens," he said.

Donald Vallee, a longtime New Orleans developer, complained that city officials had not acted fast enough.

"How many years does it take them to do something?" said Vallee, who also sits on the Louisiana Land Trust board.

He advocated selling the lots at auction. Sitting on the properties, he said, was a "pure waste of money."

Every month, LLT spends about $88 to cut the grass at each location. Other expenses range from insurance to pest control.

Since 2007, when the first homes were bought, $34 million has been spent on maintenance, $4.5 million on security and $9.1 million on overhead costs in New Orleans, according to LLT. In addition, some $38 million has been spent on demolishing 3,607 homes beyond repair and tearing up 1,256 slabs.

Visits by a reporter to neighborhoods hit the hardest by the flood found these orphaned lots are contributing to blight and the checkerboard-like rebuilding still dragging on in parts of the city.

The tour of 45 government-owned properties was focused on the Lower 9th Ward and other neighborhoods where these abandoned lots are concentrated. Overall, many unsold properties are in low-lying neighborhoods that suffered blight and poverty even before Katrina.

But they weren't confined to rundown neighborhoods. On South Galvez Street in Broadmoor, an abandoned house was the only sign of Katrina left on the block.

Jim Provensal, a musician living next door, said he wanted to buy it, but the city agency in charge of selling or developing the properties, the New Orleans Redevelopment Authority, wanted $130,000.

"That's too much money!" Provensal said. "They don't care. They know if they sell the property they won't have a job."

And so, the boarded-up house sits, paint peeling.

In the Lower 9th Ward, 739 homeowners sold to the state. About 570 of those properties remain unsold and entire blocks sit undeveloped.

"The city ain't done a thing," a frustrated Carolyn J. Claiborne said on a recent day, scanning empty lots on her Lower 9th Ward street. She complained of snakes and vermin.

The New Orleans Redevelopment Authority has said it's sitting on many properties at the request of neighborhood groups to avoid flooding the market and hurting home prices.

The agency says it's drafting plans to dispose of the properties and that it has about 750 prospective buyers. It plans to hold onto many of the other properties for the foreseeable future, NORA said.

Nicole Heyman, a New Orleans-based expert on vacant and blighted property with the not-for-profit Center for Community Progress, said holding onto the property is the right choice. She is advising the city on its plans.

When a city sells cheaply they end up "just putting properties in the hands of investors who drive the properties' values down," she said. Buyers often sit on vacant properties hoping for a market turnaround, and when that doesn't happen the properties end back up in the hands of a city, she said.

This summer the city has begun taking ownership of the 3,100 properties as federal funding runs out. Soon the city is expected to be in charge of cutting the grass and maintaining them.

Stacy Head, a City Council member-at-large, said the city doesn't have the resources.

"The LLT has actually done a good job of maintaining most of these properties," Head said. "So, when they're turned over to the city, our blight problems that we have not been able to manage are going to get that much worse."

Jeff Hebert, the head of NORA, said on Monday that the city will spend less on grass cutting, comparing LLT's efforts to maintaining a golf course.

"You're not going to get 18-feet-high grass on these LLT properties but it's not going to look like a putting green. We have budget realities we have to deal with," he said.

Hebert said NORA expects to pay contractors about $20 per house on grass cutting and to spend about $3 million a year overall to maintain the properties.

Head, who oversees housing issues for the City Council, expected about 1,500 to go unsold because of a lack of demand.

Many, including Head, want to see vacant lots turned into urban green spaces. NORA said it was open to working with neighborhoods, schools and the city's recreation department to turn empty lots into something useful -- maybe tree nurseries, dog parks, urban farms or outdoor laboratories for biologists.

The Center for Community Progress's Heyman said that unlike other cities with an abundance of vacant property New Orleans has a strong real estate market, plenty of federal rebuilding money and lots of economic development taking place.

Based on that, she figured many can be sold at market prices. Selling the good pieces could pay for maintaining the less desirable properties, she said.

Hebert agreed and said the LLT properties are ripe for large-scale redevelopment. "Whereas other people see them as problems and issues we seem them as opportunities," he said.

Raynetta Hammler, an Avon saleswoman who lives in the St. Roch neighborhood, would love to see development on two government-owned lots across the street. Hammler suggested building a playground there.

"We have a lot of kids who currently play ball in the street," she said.

She complained that four stolen or abandoned cars had been set on fire in the lots over the previous year.

"Right now, it's an eyesore," she said. "It's not serving any purpose."