PILOT Extensions for Affordable Housing Developments and Projects
The Committee spoke with members of the Housing Authority of New Orleans (HANO) and with Jeff Schwartz, the Director of Housing, Community Development, and Special Projects for the City of New Orleans, about Payment-in-Lieu-of-Taxes (PILOTs). PILOTs are agreements between the City and property owners that permit them to make an upfront payment instead of full ad valorem property taxes in exchange for providing a public good—in this case, affordable housing.
The developers of two affordable housing projects spoke before the Committee to explain the terms of each agreement, ensuring that the property taxes the City waives through the PILOT program are balanced with the public benefits gained from these developments.
While PILOTs are effective tools for generating positive public sentiment, they can also decrease property tax revenue, which the City must address amid the ongoing budget situation. When asked why certain ongoing affordable housing projects needed PILOTs when they were first developed and why they now require extensions, Schwartz explained that it was to ensure each project’s financing functioned properly. PILOTs have played, and continue to play, a crucial role in structuring these specific projects.
After a thorough discussion with the attending representatives, the Committee noted that these two projects provide affordable housing units that would be virtually impossible to obtain without the PILOT agreements.
Faubourg Lafitte - Providence Community Housing Presentation
Representatives from Providence Community Housing discussed the Faubourg Lafitte project with the Committee. Built on the site of the former Lafitte public housing in Tremé after Hurricane Katrina, Faubourg Lafitte is a mixed-income community led by Providence in partnership with others. It has completed 465 on-site rental units, 323 off-site rentals, and 107 homes for low- to moderate-income buyers, plus community amenities such as the Sojourner Truth Neighborhood Center. The final phase will add 51 affordable units and restore the last historic building.
Phases I and II include 276 units that are wholly affordable, serving households earning at or below 60% of the area median income. Rents range from $0 to about $1,242 per month, well below neighborhood market rents, ensuring affordability for very low-income residents. These phases are protected by long-term affordability restrictions and PILOT payments, which the developers seek to extend beyond initial agreements.
To view the full presentation, click here.
CJ Peete I Presentation by McCormack Baron Salazar
Judith Moran spoke before the Committee to represent McCormack Baron Salazar regarding CJ Peete I. CJ Peete I is a 460-unit mixed-income development in which 73% of units (337) are affordable, and it highlights the financial challenges of maintaining affordability.
The presentation showed that affordable housing projects cap rents below market levels but face similar operating costs, and rely on subsidies and PILOT agreements to remain viable. Without support, the project struggles to cover expenses, often operating at a loss and depleting its reserves, despite providing benefits such as better housing, jobs, and revitalization.
A financial comparison showed that, with a PILOT extension, the property earned modest positive income (approximately $140K–$190K annually). Without the PILOT, increased tax and insurance costs could result in significant annual losses (approximately $310K–$345K). The data highlighted that PILOTs are essential for maintaining financial stability.
Finally, the presentation highlighted that CJ Peete I rents are well below market rates. This data reinforces the gap between revenue and operating costs and the need for continued subsidies.
To view the full presentation, click here.
|