Two years ago, a group of developers unveiled plans to turn the site of the shuttered Brown’s Dairy in Central City into a full city block of affordable housing units.
The project entailed building 53 two-family homes marketed to homebuyers earning less than $65,000 a year. It impressed New Orleans City Council members, who praised the plan that would give low- and middle-income residents a chance to create wealth by living on one side of a double and renting out the other.
District Council member Jay Banks even suggested it could be a model “not only for the entire city but for the rest of the nation.”
Now, houses are under construction on the site. But they’re not affordable.
Short term rentals on the site of the old Brown's Dairy in New Orleans, Friday, Jan. 13, 2023. (Staff Photo by David Grunfeld, NOLA.com | The Times-Picayune)
Instead, they’re mostly four- and five-bedroom townhouses, complete with luxury amenities and second-floor balconies overlooking shared swimming pools. The plan, according to local brokers and the new owners of the properties, is to market them as short-term rentals on platforms like Airbnb and Heirloom.
The original developers — Peter Aamodt, David Hecht, Michael Meredith, Emerson Gibbs and Mike Sherman, operating as 1400 Baronne, LLC — abandoned their plans and sold the properties in late 2021 and early 2022 after running into roadblocks that they say made the concept unworkable.
More than half of the lots were acquired by brothers Daniel and Frank Glaser, who operate dozens of short-term rental units around New Orleans and the U.S. through their online platforms, Heirloom and Stayloom.
The rest of the land was sold in chunks to other developers, who also are planning or building houses for short-term rentals, according to people familiar with the projects.
Short term rentals on the site of the old Brown's Dairy in New Orleans, Friday, Jan. 13, 2023. (Staff Photo by David Grunfeld, NOLA.com | The Times-Picayune)
A separate project nearby aimed at affordable housing is still being built, and real estate experts said that because the neighborhood is close to downtown and the French Quarter and zoned for commercial use, it’s ideal for a complex of short-term rentals. Besides, they said, it will bring commerce to shops and restaurants on nearby Oretha Castle Haley Boulevard and lower St. Charles Avenue.
But advocates of affordable housing argued that the change in plans illustrates why housing policy needs reform. Until incentives are in place to make it easier to build affordable housing, developers will do what makes the most financial sense.
“This is one of the problems with short-term rentals,” said Andreanecia Morris, executive director of Housing NOLA. “People can make fast easy money rather than doing what the community actually needs.”
Creating wealth
The Brown’s dairy site originally took up nearly three full blocks in Central City. When the dairy was closed by its Texas-based owners in 2018, the land was divided into several large parcels and sold.
One block, previously a parking lot, was acquired by the nonprofit Gulf Coast Housing Partnership, which is building a five-story affordable housing development on the site with 192 units and ground-floor health care space.
The adjacent block where the processing plant stood — bounded by Baronne, Erato, Carondelet and Thalia streets — was acquired by 1400 Baronne, LLC for $3.6 million.
The group demolished the plant, cleaned up the land and began working on their project. As they explained to the council in December, 2020, one of the motivations in the $26 million project was to help close the widening wealth gap in the city by giving buyers in the targeted income bracket — 80% to 140% of the Area Median Income — an opportunity to own an income-producing property.
“The need for affordable housing in New Orleans is huge … and this will create wealth,” Aamodt told the council committee.
But as the developers explained to the council, they needed the city to provide some sort of assistance to help homebuyers pay the note on the homes, which was more than someone making $40,000 or $50,000 a year could afford without help. Among the ideas they suggested were a property tax break or a mortgage assistance program.
Council members signaled their support, but it never materialized — at least not in time. In the meantime, development costs were increasing, as supply-chain disruptions and inflation were causing the developer’s carrying costs on the land to go up.
Banks, who left the council at the end of 2021 and now works in Mayor LaToya Cantrell’s administration, said he cannot comment on what happened except to say he is “very disappointed that the affordable housing opportunity is lost because we are going to lose what makes New Orleans special.”
The developers with 1400 Baronne are reluctant to point fingers.
“We had the land, plans and financing in place. But without a subsidy for the homebuyers, the project could not move forward," said the development group. "Our vision was for affordable homeownership; we had no interest in developing a luxury project, so we chose to place the vacant land for sale.”
A different vision
Several development groups have since acquired the properties. The Glasers acquired the biggest chunk in early 2022 through two different entities in transactions totaling some $5.8 million.
“The vision for this property is to support development and investment in the area as Heirloom has done with other property,” the Glasers said in a prepared statement through their attorney. “The company plans to complete 20 homes during the initial phase of development. These properties will predominantly be used as vacation rental homes.”
Already, more than a dozen homes constructed by the Glasers and others nearby are visible on the block.
Commercial real estate appraiser Parker McEnery of The McEnery Company, who is familiar with the project, believes it will still be positive for an area that was previously industrial and has long been underinvested.
“This is awesome for the city and will create a lot of positive energy that will spill over into nearby Oretha Castle Haley (Boulevard) and even help that part of lower St. Charles Avenue,” McEnery said. “It’s going to be a fun little pocket.”
Others are not so sure. Preservation Resource Center Executive Director Danielle del Sol agrees that new investment will be good for the area. But more homes would have been a better fit.
“But you would always prefer permanent residential housing to an entire neighborhood of short-term rentals,” del Sol said.
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