Since 1978, Finance New Orleans has served as the city’s housing finance agent, providing single family mortgages to first-time homebuyers as well as low-to-moderate-income families.
At the time, cities around the country were recognizing the importance homeownership played in the stability of communities, but private financial institutions weren’t always willing to provide resources or capital to certain segments of the community or certain areas. The result was the creation of quasi-governmental agencies to step in and fill the gaps.
After almost three decades in business, things were going well at Finance New Orleans. Thanks to good investments, by 2005 the organization had a $400 million balance sheet.
Then came Hurricane Katrina, however, which wiped out about 90% of its investments.
As the city joined the nation in an economic downturn, the BP oil spill hit. By the time Damon Burns became president and CEO of the agency in 2016, Finance New Orleans’ balance sheet was down to just $30 million.
The agency was forced to rethink its business model, which has resulted in a new model focused on not just affordable single-family homes, but multifamily projects and city infrastructure. In addition to affordability, these investments are now focused on sustainability.
Since 2018, Finance New Orleans has served as the city’s housing finance agency and green bank rolled into one — a unique hybrid called a green finance authority. The agency’s seven-member board is appointed by the New Orleans City Council and its staff of nine, helped by what Burns calls “an army of consultants and partners,” works closely with the mayor’s office.
The organization recently made two big moves: On June 25, it held the first-ever Resilient New Orleans Innovation Challenge showcase. Co-designed by Finance New Orleans and Elemental Accelerator, the event showcased 34 technologies aimed at “reducing the overall cost of building components, while enhancing resiliency and affordability for tenants and homeowners alike.”
During the showcase, Finance New Orleans also announced it was launching a green mortgage program that will provide families making up to 140% of the area median income with up to $25,000 in down payment assistance.
Biz New Orleans recently chatted with Burns about these new endeavors, as well as the city’s strengths, weaknesses and opportunities when it comes to becoming a more affordable, more sustainable New Orleans.
Let’s start with some basics: When you’re talking about sustainability, what do you mean?
Sustainable can mean several things, but in general, we categorize it as energy, wind and water improvements toward single family properties. And then there are other categories, too, like clean transportation and nature-based solutions.
Sustainability is about how a product is built, and making that leap toward using technology, or an improved process. That may sound like a simple thing to do, but it’s not. It takes a cultural shift. It takes a shift in our systems. Our Resilient New Orleans Finance Plan is a public sector document that lays the foundation for how we’re going to operate in collaboration with the private sector.
The first thing that pops into my mind as a sustainability program is the new fortified roof program. Is this an example of what you’re talking about?
Yes. Being sustainable means being more in step with the challenges that we face and helping our homes survive into the future. We’re not always talking about high-end technology. It could be a nature-based solution, like a French drain, or a stormwater management system around the house, or water technology inside of the house. There’s a variety of investments that can be made that fall under the sustainability category. Right now, we’re identifying companies that have products that make sense for New Orleans. It’s about getting ahead and trying to package these things so that we can make the transition in a more rapid fashion.
What were some of the top products you are considering from the recent showcase?
Thirty-four companies applied — we got applications from companies as far as Poland, so that was exciting. But we also got a lot of local and regional ideas.
Ultimately, we selected four companies. One of them is Gro Enterprises, which is a hemp-based building materials company. We also had another company called Gradient that has created a heat pump-based window unit, which is an alternative to HVAC, particularly for public housing units, affordable housing projects. It’s a more affordable way of providing heating and cooling to the home. We also had a company called RainStick, which has a water recycling technology that is intended to save water costs for a property. And lastly, there was a company called Frontline Gig, which has a workforce development application aimed at creating a pathway for green jobs. For individuals in the community looking to learn new skills or get involved in new projects, they provide a pathway to training and then a pathway to start working on those projects right away.
These are all technologies that we’re going to start implementing this year in a series of projects that we’re sponsoring ourselves.
So, the goal is to find new products and systems and test them in projects locally?
Yes, but once they are using their products in New Orleans, the next step is to get these companies to have a presence here. That’s the end goal, because we really need to create a new type of industry here, and it needs to be robust. It needs to be something that attracts people here and where we can organically grow talent here. Calvin Mackie with STEM Nola gave one of the most powerful performances of the day when he talked about the work they’re doing to prepare youth for STEM careers. Anything we’re going to do in climate tech STEM is going to have to be the foundation.
Sustainable solutions are obviously great for homeowners when it comes to lowering bills like energy and insurance, which is very important, but there is an upfront cost involved. Coupled with the fact that building costs have increased since the pandemic, how does that affect the ability to make sure these advanced homes are still affordable?
Sure. Cost is a big part of the conversation when we’re working with these companies. That’s also where our new green mortgage program comes in. We have participating lenders, starting with Hancock Whitney and Liberty Bank. We’ve worked with both of those banks for a long time.
The program offers a family a first mortgage and a second mortgage. The first mortgage is FHA, Freddie Mac or VA. The second mortgage is downpayment assistance, which typically comes from Finance New Orleans or some grant source — we got a grant from the Robert Wood Johnson Foundation.
FHA and Freddie Mac understand these homes need to be more sustainable, so there are allowances built into the mortgage to allow homeowners to add features to their home. With an FHA mortgage, for example, a homebuyer can add $8,000 of energy efficiency upgrades. FHA stretches the loan criteria to allow for the increased costs because it is expected that the property is going to be more valuable over the long run, so they don’t mind the upfront investment being made. That’s going to add a few dollars to a homeowner’s monthly mortgage payment, but it should drive down insurance and maintenance costs, along with energy bills. With all the technologies we look at, we want these costs and homeowner returns clearly spelled out.
You mentioned earlier that Finance New Orleans is working on some affordability projects. Can you talk about those?
Yes. First, we launched an innovation fund, which will allow us to make equity investments, test out new ideas and new products. The first project out of the fund is going to be a series of homebuilding projects. One is five units in the Pontchartrain Park area, where we’re going to build singles or doubles; we’re still trying to figure out the plan. We just released an RFQ for developers — you can see that on our website. The goal is to build highly sustainable housing and sell these homes to families that qualify for our green mortgage program.
Sustainability is about how a product is built, and making that leap toward using technology, or an improved process. That may sound like a simple thing to do, but it’s not. It takes a cultural shift. It takes a shift in our systems.
What’s your work like on the multifamily end?
Multifamily has been the main activity for us since 2020, when we created our Resilient New Orleans Finance plan. In this area, we offer developers of affordable housing bond financing, or debt financing, as well as tax exemptions. Since 2020, we have closed 10 tax exemption transactions for affordable housing projects across New Orleans.
How do you decide which products are worthy of support?
There’s a standard called Enterprise Green Community Standards, which is pretty universal — a lot of other cities and states are using those standards. All the projects we consider at least meet those standards at a bare minimum.
How does infrastructure fit into what you are doing?
That started also with the launch of the 2020 plan, and that came about because before Hurricane Katrina we had a single-family portfolio of assets, and the reason why we lost that portfolio is not only were the homes not sustainable enough to withstand the climate event, but the infrastructure also itself around the homes wasn’t sustainable enough to bounce back.
Now, a lot of the issue was the levee system, and we’ve since seen a $14 billion investment in that, so that’s a great start, but there’s other infrastructure in the community that’s important, too. There’s a term we use called decentralized infrastructure, which for a homeowner means you can use features integrated into your home to manage the water runoff from your property. That, in turn, relieves pressure on the overall water system.
We want to make sure that we can amplify all of the large-scale infrastructure investments that are being made with smaller infrastructure investments, like water systems, rooftop solar, even community solar. We have some developers that are applying to us right now to build community solar farms in different parts of the city, where the output of those solar farms is going to be sold back to families in the affordable housing category.
Another infrastructure example is clean transportation. The Regional Transit Authority, the airport, they all have projects that require sustainable investment, and their balance sheets aren’t always large enough to handle certain projects, particularly sustainability projects, which are new. So, they need a finance department, which is why we’re working with other governmental agencies on amplifying their infrastructure investments with sustainability features.
As an example, the Regional Transit Authority wants to build an electric rapid transit line across New Orleans that is going to have stations across the city. Each one of those buildings represents an opportunity for sustainability. We’re going to help them build a micro grid, or string of buildings that are connected and fully sustainable, with EV charging, heating and cooling, clean energy, clean water, everything the community might need in times of disaster, or on a really hot day or as a convenience. All those things are going to require some testing — that’s where we come in. That’s our role in the city of New Orleans, to really be on the forefront and push the edge with the type of investments that we’re making, not just for our own balance sheet, but introducing them to other agencies.
Can you elaborate on Finance New Orleans’ funding situation?
We are truly a financial institution. We don’t make money if we don’t lend or invest. We can receive money from the city, state, federal government foundations. We’ve received a big philanthropic investment in the past few years to help supplement us until we can get our cash flow going again.
Are there other organizations or other areas in the country that you look to for best practices?
Housing finance agencies have been around since the ’70s. And we’ve been a part of a network of housing finance agencies for a long time — the National Association of Local Housing Finance Agencies. I’m on the board of that organization. I’m the treasurer right now, so I get a chance to work with leaders from other agencies across the country like D.C., Atlanta, Miami and San Francisco. To that end, Invest Atlanta is — they’re one of our peers, but more of a role model. We also look at the D.C. Green Bank. They’re a new organization, but they’re doing some good things, and they started right about the same time we decided to become the city’s green finance authority.
The New York City Housing Development Corporation is the finance authority of all finance authorities. They’re bigger than a lot of banks. They have a huge balance sheet, so they can reinvest in a lot of low interest loans and projects and create more impact. We will never be as big as them, probably, but we could at least get our financial situation as strong as they are to our scale.
What are the biggest challenges in making all this happen?
A few challenges come to mind. No. 1, nature — nobody controls nature. You must have a recognition of that in all these things we’re doing. You must work with nature.
And then there’s cultural adoption. We had a panel yesterday on the cultural perspective of climate technology. Sometimes the community can be a little wary of new ideas, new technologies, regardless of the demographics of that community. There can be some skepticism, so those products need to be culturally competent. They need to make sense, and the community must be ready to adopt them.
Policy is also a challenge. New Orleans is doing well, in terms of evolving its policies to allow more sustainability. For example, all of the multifamily projects I mentioned earlier, they all had to meet stormwater management minimum guidelines from the city of New Orleans. We need more implementations along those lines.
Lastly, I will say financing, because our balance sheet was put in such a point of disrepair, that we need new injections of capital to move forward, and that’s hard to get. It’s hard to get philanthropy to make the public investment.
The federal government just allocated $27 billion for green funding for the Greenhouse Gas Reduction Fund, and some other programs. That’s going to be a shot in the arm, but also, that’s not going to come around every year, or even every 10 or 20 years. It’s almost like catching lightning in a bottle. But we feel like we’re in a pretty good position to receive some of that money.
We’re also working with private financial institutions — we’ve been trying to get banks, investors, investment banks, community banks, all types of financial institutions, hedge funds. We’re trying to break even within the next two or three years. Frankly, we just don’t have the amount of capital in the city to do all the things that are necessary. That part is very difficult because we’re not a private company where we can say, “We will give you X amount of return over the next 10 years.”
That’s our role in the city of New Orleans, to really be on the forefront and push the edge with the type of investments that we’re making, not just for our own balance sheet, but introducing them to other agencies.
What are the opportunities here? What makes New Orleans a good place for programs like this?
Part of our responsibility being on the board of the National Association of Local Housing Finance Agencies is we go and lobby and advocate in D.C. for all finance authorities. Oftentimes, I’m in the room with New York City, Los Angeles, Atlanta, and frequently the conversation is redirected toward New Orleans — that’s what they want to talk about. We have sort of an intangible that other places don’t have that allows us to be in rooms that maybe other cities our size don’t get access to.
The other opportunity we have is since we have been ground zero for climate events, maybe next to Miami and some other places, we know the industry better than everybody. People come here all the time for conferences and events to learn about some of the things that we have learned over the years.
There’s also our resilience as a people and as a community. There’s a lot of admiration for that, and because of that we get the attention of the world. There’s an opportunity for us to take that advantage and use it to bring in the kind of capital that we need. We need to say “We know you love New Orleans, and we love it, too. Now let’s make it the best New Orleans possible.”
The last thing that encourages me is I went to a community event for the organization Water Wise Gulf South, and in this packed room a guy from Amsterdam got up, and first he said how much he loved New Orleans, but then he said, “Look, you’re 6 feet below sea level. I live 12 feet below sea level in Amsterdam and I sleep like a baby at night, because we have made the investment in our city and our infrastructure to protect ourselves from water.” His message to us was that we can get it right, but we must be innovative, we have to collaborate.
Recent Finance New Orleans Project News
October 24, 2023 | St. Bernard Circle Apartments
Groundbreaking of St. Bernard Circle Apartments across from Circle Food Store at 1429 St. Bernard Avenue. The $22 million, four-story project will include 51 apartments (40 of which will be dedicated to long-term workforce housing offering rents at or below 60% of the area median income.
January 19, 2024 | H3C New Orleans
Grand opening of H3C New Orleans, an $80 million, affordable-housing development in Central City. The five-story building on Oretha Castle Haley Boulevard is anchored by a ground-floor community health clinic managed by DePaul Community Health Centers.
February 2024 | Tivoli Place
Plans announced for a complete renovation of the Tivoli Place apartment building on St. Charles Avenue in the Central Business District. The $87.6 million project will significantly upgrade the senior affordable housing community to include rooftop solar panels and a more efficient HVAC, as well as a media room, library, fitness center and medical exam room. Completion is expected in 2025.
March 22, 2024 | Grove Place
Grand Opening of Grove Place in Hollygrove. The $14 million project revitalized 23 historic homes and added nine new units, all classified as affordable
March 27, 2024 | St. Claude Gardens II
Groundbreaking of $11.7 million affordable housing complex in Lower Ninth Ward. The project’s 39 units set on 22 lots are all Energy Star and FORTIFIED Gold certified.
