Sule Aygoren Carranzais managing editor ofRealEstate Forum.

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[IMGCAP(1)] NEW ORLEANS-In the aftermath of the devastatinghurricanes of 2005, several real estate firms have traveled down tothe Big Easy to help with the reconstruction effort. Among them isDomain Cos., a New York City-based development company that iscurrently working on three large-scale, mixed-use projects alongTulane Avenue, as well as several smaller ones in the vicinity.

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The company's principals, Matt Schwartz and Chris Papamichael,are not new to the city--both are alumni of Tulane University. Thepair had been looking at a potential deal in the area, but Katrinablew those plans off course. Yet after the hurricane, saysSchwartz, "we had an opportunity to assist the city in its recoveryby focusing on the core strength of our company, which islarge-scale community development projects."

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While a lot of major community development players around thecountry have chosen to focus on New Orleans' four massive, severelydilapidated public housing projects--the C.J. Peete, B.W. Cooper,St. Bernard, and Lafitte developments--Schwartz says Domain is themost active builder of mixed-use, mixed-income housing, with thelargest pipeline on Tulane Avenue.

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[IMGCAP(2)] So far, the firm has invested some $125 million intoits projects, which total 500 or so units. They are the 228-unitCrescent Club, which also has 5,000 sf of retail; the 183-unitPreserve; and the Meridian, with 72 units of work force housing,where rents for the one- and two-bedroom units are $550 to $650 permonth. At the Crescent Club and Meridian, 60% of the units aremarket rate, while the remaining 40% are subsidized. Domain is alsodeveloping another 70,000 sf of retail in commercial properties itpurchased around the sites.

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The residential units are mixed income to benefit a variety ofhouseholds, says Schwartz. "We're delivering is a true class A,renter-by-choice product that has more affordable levels to it,which helps us put the financing package together to make theproject feasible," he says. For the most part, 60% of the units aremarket rate, while the balance is classified as moderate income.The latter component is available to households making about$36,000 a year, which Schwartz says could accommodate youngfirefighters, police officers, teachers and the like. "We'reactually developing right in the heart of the city's Civic Complex,near the criminal courthouse, the district attorney's office,police and fire headquarters, civil and criminal sheriff's officeand Xavier University. All of those entities have a very highnumber of employees, the majority of which would qualify for themoderate-income or work force housing units."

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[IMGCAP(3)] In addition, Domain has several projects in the areasurrounding these developments worth some $30 million to $40million. In the area around the Preserve, for example, 25single-family homes are under way. And most recently, the companybought the 30,000-sf Gold Seal Creamery, a historic building it'sconverting into artist galleries and workspace. Also in the worksare several neighborhood commercial developments and publicinfrastructure improvements, being done in tandem with the city, aswell as the redevelopment of a public park.

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Support from the community, of course, is vital to thesedevelopments. "There was a unified planning process that createdkind of the final master plan for redevelopment that reflected thecommunity's goals, and what we're doing is consistent with that andwas one of the priorities outlined in that effort," explainsSchwartz.

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Domain's three main projects are also receiving financialassistance from the Go Zone recovery package. "We've accessed acombination of incentives that were put in place to help the regionrecover after the storm, including tax credits, communitydevelopment block grant funds and other tax incentives," saysSchwartz. Traditional construction financing is coming from Bank ofAmerica, and Centerline is providing equity as a syndicator for thetax benefits, and is also serving as seller-servicer for FreddieMac, which is providing permanent financing.

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Putting those financing and incentive programs in place was thehardest part of the process, says Schwartz. "Getting that recoverypackage passed, and then taking that recovery package and workingwith the agencies to put those programs in a format to address therecovery needs of the region--that took us some time to do. Therewas also a large-scale planning and recovery effort that had totake place in order for the developments to get under way," hesays. "We've crossed that hurdle at this point, and that's thereason the recovery has picked up so much momentum. There's just somuch going on right now in New Orleans, and that's really a resultof finally having been able to overcome those initial planninghurdles that we had in order to be able to get under way."

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Still, problems persist. The insurance premiums, for one, aresubstantially higher than before the hurricanes, and higher thanmost other markets, says the executive, "but that was anotherfactor that needed to be taken into consideration when puttingtogether the incentive package that we would need to make thenumbers work."

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Domain has also taken steps to guard against flood protection,even though the projects are in New Orleans' Downtown core, whichwasn't hit as hard as some of the outlying locations and is one ofthe areas that have benefited the most from the levy reconstructionwork that's been done thus far. "We have designed the projects withthe potential for another event in mind," Schwartz relates. All ofthe structures are built to new building codes and are thus able towithstand hurricane-force winds. Further, all of the housing beginson the second level, with concrete parking taking up the groundfloor.

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The next phase in the firm's efforts on Tulane Avenue isbuilding more mixed-use complexes with an emphasis on commercialand retail components in addition to housing, he says. The firmsees a very bright future for the Big Easy. "We're very excited tobe in the area of New Orleans we're in. Along Tulane Avenue, this25-block strip of the city, there's $3.5 billion of developmentunder way," Schwartz says. "The city and the state are developing anumber of new economic development initiatives that we found verypromising and attractive. Of those, the most significant to us isthe development of a large medical and biotechnology corridorincluding a new cancer center and biotech company incubator, newLSU hospital and VA hospital. There are also new courthouses, newdistrict attorney's offices, police, fire and EMS headquarters. Ontop of that, there's a total overhaul of the area's infrastructure,from the roads and main thoroughfares to side streets to streetlighting and sidewalks.

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"I think the resiliency of New Orleans is clear. Not many citieswould be able to bounce back as successfully as this one has. Theconvention and tourism business is creeping back to the level itwas at before the storm, and the ports and the manufacturing andenergy industry are also doing well. Those core segments of thecity's economy have bounced back and we feel they'll continue tothrive," he adds. "Given the damage of the housing stock afterKatrina and the return of these industries, there's a substantialimbalance between supply and demand for the type of housing we'redeveloping. We saw an opportunity to develop housing given thatimbalance, and also an opportunity and a comfort level given thelong-term economic prospects for the city, which we think are verypositive."

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If recent reports are any indication, developers like Domain mayhave no problem attracting residents to their projects. In anindependent survey conducted by the University of Texas atArlington and commissioned by the Housing Authority of New Orleans,71.6% of 2,100 current and former New Orleans public housingresidents polled said they want to return to the city, but only 35%preferred to return to public housing. Only 20.3% stated they'dlike to return to the public housing unit they lived in prior toKatrina. Meanwhile, nearly 37% want to come back to New Orleans,but want a Section 8 Housing Choice Voucher to rent a home ratherthan live in public housing. And when narrowed down to householdsthat lived in the city's main four public housing projects, a mere13.7% preferred to return to their former units.

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"The vast majority of HANO's families want better housing insafer communities," says C. Donald Babers, chairman of the HANOboard who was appointed by the Department of Housing and UrbanDevelopment. "We are creating a vibrant, safe environment wherechildren and families can thrive." Currently, the housing authorityand others are redeveloping the more than 3,200 public housingunits and another 1,765 affordable housing residences forhouseholds at or below 80% of the area median income, as well as1,800 market-rate and affordable single-family homes that would bemarket rate and affordable.

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