As Jindal Departs, Louisiana’s Affordable Housing Agency Confronts Bankruptcy

On Jan. 13, 2016, two days after John Bel Edwards takes the oath of office and is sworn in as the 56th governor of Louisiana, the eleven members of the state’s affordable housing agency, the Louisiana Housing Corporation (LHC), will convene in Baton Rouge and consider drastic measures to avoid imminent bankruptcy, according to sources familiar with the discussions.

During the last twelve months, in an attempt to remain financially afloat, the LHC has already slashed its full-time workforce by 20%, from 136 employees to 110. Yet according to Michelle Thomas, its interim executive director, these reductions have done very little to stop the bleeding, and there is significant concern the state agency could become effectively insolvent.

In a report issued on Nov. 25, 2015, Thomas tells her board, “Despite the budget reductions resulting from the reduction in headcount, at the end of period four (Oct. 31, 2015), the corporation was functioning with operating deficit of $820,088.” It remains to be seen how and whether the agency, which awards and manages tax credits, grants, and subsidies for low-income housing development projects from the state and federal governments, will be able to keep its own doors open without a massive infusion of cash from the state’s general fund (which appears to be, currently, statutorily impossible).

This, of course, is extremely ironic for an agency ostensibly tasked with making prudent and responsible financial decisions involving federal and state tax credits and incentives for the private-sector development of low-income housing projects.

Gov. Bobby Jindal created the Louisiana Housing Corporation in 2011, dissolving three agencies, including the Louisiana Finance Housing Authority and the Louisiana Recovery Authority, into one “streamlined organization,” which would then be ruled by six members appointed by Gov. Jindal, two members appointed by the Louisiana Speaker of the House, two members appointed by the President of the Louisiana Senate, and, of course, State Treasurer John Kennedy.

At the time of its creation,”Moody’s Investors Service warned that dissolving the housing finance agency would be a ‘credit negative,'” according to an Aug. 27, 2015 report in The Atlantic.

The LHC has been beset by controversies for several months.

Its former executive director, Frederick Tombar III, was forced to resign last May after being accused of sexually harassing two of his employees. According to Louisiana Division of Administration Director of Human Resources Ron Jackson, Tombar “clearly establish(ed) a pattern of sexual harassment and hostile work environment,” though he denies the allegations.

Tombar was replaced by Michelle Thomas, a former Deputy Mayor in New Orleans who is currently being sued for breach of fiduciary duty to her role in the Newark Watershed Conservation and Development Corporation. Ms. Thomas allegedly served as a board member for NWCDC, resigned from the board, and then secured a position with the Ferguson Group, which, according to the complaint, then “promptly received a consulting contract with the NWCDC.” Subsequently, Thomas moved to New Orleans and became a Deputy Mayor in Mitch Landrieu’s administration.

“Michelle L. Thomas on Friday became the second New Orleans deputy mayor to resign amid controversy in the space of two years,” The Times-Picayune reported in 2013. “She faced questions about court records that show an extensive arrest history for her fiance.”

Today, Ms. Thomas leads one of Louisiana’s most important public agencies, and though it’d be unfair to attribute the LHC’s current struggles to her (she was only appointed a couple of months ago), it is nonetheless disconcerting that a Jindal-created and Jindal-controlled state agency selected, as its interim director, a woman who has been publicly plagued by headline-grabbing scandals in her last two previous positions.

But most notably, State Treasurer John Kennedy, despite his fiduciary responsibilities as a member of the board and his public protestations against profligate government spending, skipped out on the majority of the board’s meetings in 2015, sending proxies for three meetings and completely missing another.

Treasurer Kennedy’s role is critical, because Kennedy is just as responsible as Jindal for the creation of the LHC. As Chairman of the State’s Bond Commission, his obstinate refusal and imposition of a moratorium on new low-income developments in New Orleans, including one that served people with disabilities, resulted in a complaint by the United States Justice Department, kickstarting the discussion about dissolving different agencies in order to consolidate and concentrate decision-making power between Kennedy and a very small number of Jindal’s appointees.

Kennedy dragged the suit out as long as possible, until finally settling in 2014. Quoting from the Justice Department:

The Justice Department announced today that the United States District Court for the Eastern District of Louisiana has approved its settlement with the Louisiana State Bond Commission resolving the department’s housing discrimination lawsuit. The lawsuit alleged that the commission violated the Fair Housing Act and the Americans with Disabilities Act by adopting a moratorium on affordable housing financing in 2009. The moratorium blocked financing for a proposed 40-unit affordable housing project known as the “Esplanade.” Twenty of these units would provide permanent supportive housing to persons with disabilities.

Prior to the entry of the settlement by the court, the commission voted to approve financing for the Esplanade project and lifted the moratorium on affordable housing projects. Under the settlement, the commission agrees to refrain from further obstructing or delaying financing for the Esplanade and from adopting any future policy that would prevent consideration of affordable housing in New Orleans, including affordable housing for persons with disabilities. The federal Fair Housing Act prohibits discrimination in housing based on race, color, religion, national origin, sex, disability and familial status. Title II of the Americans with Disabilities Act prohibits governments from discriminating on the basis of disability in administering their zoning laws.

For background on this, I highly recommend Brentin Mock’s August 2015 story titled “Why Louisiana Fought Low-Income Housing In New Orleans After Katrina” in The Atlantic‘s CityLab. 

Bobby Jindal will likely never have to answer for his negligent leadership of this important agency, but John Kennedy is still on the board.

And John Kennedy’s convinced himself he needs to run for U.S. Senate again, and he apparently believes talking about the 0.75% of food stamp fraud in Louisiana is more important than addressing the state’s structural deficit or his stewardship of a beleaguered state agency that facilitates the private-sector development of low-income housing.

For all of the blustering about other folks who refuse to show up to work and still get free food, it’d sure would be nice if Treasurer Kennedy finally appeared at the next LHC meeting and did more than merely order another study.

I’ll bring some boxed lunches from City Pork. My gift.