Surprise Budget Amendments Allocate ARPA Funds without Addressing our Greatest Housing Needs

In a surprise to advocates and constituents following the murky annual New Orleans City budget process, the New Orleans City Council approved a final budget December 1, 2022, which included allocations of two-thirds of remaining American Rescue Plan Act (ARPA) dollars without notice or transparency on how the one-time funds would be distributed. Unfortunately, little of this money went to the uses the Louisiana Fair Housing Action Center (LaFHAC) advocated for earlier in the fall, with the exception of $2 million of general funds allocated to New Orleans’ Right to Counsel program.

LaFHAC proactively follows this process and notified the Cantrell Administration in the fall of 2021 of recommendations to address New Orleans’ growing homelessness crisis, an underlying and underfunded cause of the violence in our city. This fall, as budget season began, LaFHAC reminded City Council and the Mayor of these recommendations by letter and requested a transparent ARPA budgeting process after being told my multiple Council offices that final decisions about the money would come in January 2023. Instead, with no public notice and in a very short time period, two-thirds of the money was allocated and approved in the final budget.

The American Rescue Plan Act, passed by Congress and signed into law in 2021 by President Biden, is a $1.9 trillion economic stimulus bill designed to speed up the country’s recovery from the economic and health effects of the COVID-19 pandemic and the following recession. The City of New Orleans’ second tranche of funds, approximately $194 million, should have be used to help the most deeply impacted residents recover from the lingering effects of the pandemic, but local housing advocates have concerns about the Mayor’s suggested allocation for housing needs.

Mayor Cantrell’s budget priorities greatly favored homeowners over renters, when renters in Louisiana are 15 times more likely to be at risk of losing their home and becoming unhoused. As an example of risks faced by renters vs. homeowners, only 5% of Louisiana homeowners are behind on their mortgage payments, while 30% of Louisiana renters—the highest of any state—are behind on rent.  And for homeowners at risk of foreclosure there is the $147M  Louisiana Homeowner’s Assistant fund to address those needs. 

These budget priorities ignore the U.S. Treasury’s clear guidance for the use of ARPA funds, which state as with all interventions to address the negative economic impacts of the pandemic, affordable housing initiatives must be responsible and proportional to the harm identified.”  And it couldn’t be more clear that New Orleans, like other cities across the nation, has fallen deep into an affordable rental housing crisis with no real plan on how to pull ourselves out of the hole. 

American Rescue Plan funds provide a rare opportunity to invest one-time resources in New Orleans’ critical housing affordability needs and to sustain our city for decades to come. Research shows that investments in reducing homelessness and creating housing stability for those most at risk will also reduce healthcare costs, reduce incarceration, boost incomes, and allow children to succeed in school.

LaFHAC’s recommendations for $90 million of ARPA money for housing include:

  • $50M should be used as a one-time investment in building permanently affordable rental housing units in neighborhoods of opportunity to serve families at 50% AMI or below for decades into the future.
  • $15M should be used to develop or convert hotels to non-congregate shelters to address our growing crisis of unhoused residents.
  • $5M should be used to expand wrap-around and supportive services for residents living in non-congregate shelters or deeply affordable housing.
  • $10M should be used to capitalize a rental repair program for small landlords that will help them bring their rental properties up to code in exchange for holding their rents stable for at least 15 years.
  • $10M should be used to capitalize an anti-displacement fund to assist renters who have to move because of dangerous health or safety violations in their rental homes.

All $90M of LaFHAC’s recommendations target people most likely to be at risk of homelessness or already experiencing homelessness. It’s not clear that City Council funded any of these crucial housing needs with the $123M of ARPA money they allocated. Moving into January of 2023, there remains $70M of ARPA funds and another $100M+ of excess revenue known as “Fund Balance” to be divided up over a host of other issues. 

The priorities for these remaining funds should be on people most likely to face eviction and homelessness. Both the Cantrell administration’s initial plan for ARPA housing funds and City Council’s approved 2023 budget makes New Orleans an outlier among other cities that have used ARPA funding for affordable housing. The National Low Income Housing Coalition (NLIHC) maintains a database of state and local programs funded through ARPA money and regularly provides reports on this work. As of November 2022, of the 365 programs in 112 states and local jurisdictions that the NLIHC is tracking, 95% were designed to benefit people experiencing homelessness or to build affordable rental housing.  Notably, Houston, which has been lauded for its results in reducing homelessness, chose to dedicate all of its ARPA funding for housing people most at risk of homelessness. 

City Council has repeatedly emphasized their stated goals of slowing our homelessness crisis and addressing the underlying causes of violence in our city. At the October 2022 Quality of Life Committee meeting, both Dr. Jennifer Avegno, Director of New Orleans Health Department, and Martha Kegel, Executive Director of UNITY of Greater New Orleans, the lead organization for over 60 homeless serving organizations, testified that the most essential tool we have to stop homelessness is affordable rental housing, and our population of unhoused people is almost entirely the result of renters who have lost their homes.

Moving forward with plans for allocating the remaining ARPA funds, LaFHAC is urging the City Council to do the following:

  • Meet with LaFHAC, UNITY, and other groups responding to this crisis before finalizing decisions on the ARPA funds. 
  • Dramatically increase the ARPA funding allocated to affordable housing and utilize remaining unspent funds from past years (Fund Balance to meet the full $90M need.
  • Ensure that any ARPA and Fund Balance affordable housing funding is proportional to the need and prioritizes people experiencing homelessness or at risk of homelessness.
  • In future annual budgets, prioritize programs and services that prevent violence, rather than react to it, by allocating at least $20M of general fund money to affordable housing initiatives that are proportional to the need.

The New Orleans annual budget project remains opaque at best, with last minute decisions, little notice of changes, and an all-consuming, marathon month of meetings that any member of the public must attend to attempt to peer behind the curtain. LaFHAC calls on all responsible parties from the Mayor, the Chief Administrative Office, and City Council to work with advocates and constituents to create a more transparent process, openly engage with the public, and to properly allocate this one-time funding to those most impacted by the devastating and ongoing effects of the COVID pandemic.

Posted by Malcolm Phillipson 01/04/2023and categorized as Blog, Press Releases, Uncategorized