Market Study Assessment

1. Market Study Assessment Evaluation of BGR’s Study Entitled: “The House that Uncle Sam Built, The Continued Expansion of Subsidized Housing in New Orleans” Presented by: Patrick Bowen, Vogt Williams & Bowen, LLC September 2009

2. VWB Research’s Experience • National Real Estate Market Research Firm • Conducts approximately 600 market studies annually (60% are affordable housing studies) • Conducted studies in 49 states, including studies commissioned directly by 9 state finance agencies • Members of NCSHA, NCAHMA, NAHRO, NASLEF, and NH&RA • Studies conducted in Louisiana and New Orleans • Housing needs assessment experience (statewide, countywide and metropolitan area studies)

3. VWB Research Objectives • Determine the purpose of the BGR report • Validate or invalidate statistical information used in the BGR report • Provide an opinion as to the approach and methodology used in the BGR report • Provide alternative approaches and methodologies in assessing the Orleans Parish’s Housing market

4. Purpose of BGR Report • Demonstrate the change in the number of government subsidized rental units between 2005, 2009 and 2012. • As acknowledged in the BGR Report, “…this report provides numbers on one part of the supply equation: the existing and projected subsidized rental housing supply in the city and in the metropolitan context.”

5. ORLEANS PARISH - SUBSIDIZED RENTAL UNITS HOUSING PROGRAM 2005 2009* 2012 TENANT-BASED VOUCHERS 9,122 16,617 16,660 PUBLIC HOUSING 5,182 2,743 5,568 TAX CREDITS 2,493 2,419 4,291 HUD PROJECT-BASED RENTAL ASSISTANCE 3,068 1,399 2,628 SMALL RENTAL PROP. PROGRAM 0 821 6,557 TOTAL 19,865 23,999 35,704 1 2 3 *April Source: BGR’s The House that Uncle Sam Built (Table 1)

6. Housing Stock 2005 to 2009 • The actual number of subsidized and Tax Credit units in Orleans Parish decreased from 10,743 in 2005 (pre-Katrina) to 6,561 in 2009; a net decline of 4,182 affordable rental units, or -38.9%. • If the 821 units that were closed by 2009 under the Small Rental Property Program are included in supply, the Parish had a net decline of 3,361 subsidized units, or -31.2%.

7. Housing Stock 2005 to 2012 • Assuming all potential units were developed, BGR projects that the total subsidized supply in Orleans Parish will increase to 12,487 units by 2012. This is a net gain of 1,744 units from the pre-Katrina supply of subsidized units, or an increase of 16.2%. • Even if all of the 5,926 potential subsidized units are added to the market by 2012, these units will likely not be enough to meet the anticipated need from both new renter household growth and replacement of functionally obsolete housing.

8. Vouchers • BGR reported 16,617 vouchers currently in use in Orleans Parish, an increase of 7,495 from the 9,122 vouchers that were in use in 2005 (pre-Katrina). • This increase is primarily attributed to the Disaster Housing Assistance Program (DHAP). • This increase in vouchers alone represents the largest increase in current and projected subsidized “units” estimated and projected by BGR.

9. Vouchers • Vouchers are equated to units in BGR report, even though voucher holder may not secure unit. • Some vouchers are used in Tax Credit units, likely double-counting some of the subsidized units. • Many rental property owners wanting to accept voucher holders, can’t pass program’s inspections. • Vouchers can be used in open market, but “special needs” households may have limited options.

10. Small Rental Property Prog. • As of 2009, BGR concluded that 821 affordable units have been added to the Orleans Parish market through the program; an additional 5,736 will be added by 2012. • A 2008 Audit indicated that there had been few closings within the program due to numerous problems. • The program has been slow to provide affordable housing, with only 16.1% of all affordable units receiving awards or commitments statewide actually closing.

11. Small Rental Property Prog. • While the program has been modified over the past year, VWB believes that only a portion of these units will be built. • Because the projects involve four-unit or smaller projects, many of the amenities and supportive services required by low-income households will not be met. • A majority of the units renovated under the program are restricted to households with incomes of up to 50% AMI, while roughly one-fourth of all units are restricted to households at either 65% or 80% of AMI.

12. VWB Demand Estimates

13. Reconciling Supply & Demand Note: The actual number of units that can be supported is contingent upon numerous factors such as targeted incomes, rent levels, units types, quality, services, location, etc.

14. Conclusions • BGR accounts for existing and planned supply, but ignores the need for replacement housing. • BGR assumes all subsidized units in the pipeline will be built. Therefore, BGR pipeline estimate is a “best case” scenario. • The BGR report does not provide any demographic data or make an assessment of the strength of the rental housing market, and lacks any reconciliation between supply and demand. • The BGR report equates vouchers to units, yet units with vouchers holders are not guaranteed housing.

15. Conclusions • Equating vouchers to units also assumes the housing needs of low-income households are being met. • BGR report provides current voucher use information, but does not discuss the HANO waiting list. • BGR indicates that 25% of all housing in Orleans Parish is subsidized, while Jefferson (5%) and St. Tammany (2%) have smaller shares, yet ignores that that 35.7% of all Orleans Parish’s households are low-income renters households. • BGR report is a summary of subsidized rental housing inventory and does not draw conclusions on housing need or demand.

16. Recommendations • A comprehensive housing needs assessment of Orleans Parish should be initiated. • LHFA, HANO, and other organizations should monitor housing market conditions of the subject rental market on a regular basis.

17. Contact Information Patrick Bowen VWB Research 869 W. Goodale Blvd. Columbus, Ohio 43212 (614) 225-9500 Patb@vwbresearch.com