The four largest public housing developments in New Orleans were hit hard by Hurricane Katrina, displacing thousands of residents. Rebuilding those communities to allow residents to return to New Orleans from neighboring cities and states is a major part of the region’s revitalization strategy.
In fall 2008, however, difficult market conditions made it challenging for real estate developers to find investors to finance these types of projects, including one historically known as C.J. Peete.
Goldman Sachs had a strong relationship with McCormack Baron Salazar, the local developer committed to the project.In winter 2008, Goldman Sachs’ UIG — the company’s investment group focused on urban markets — began to evaluate the project and the potential to play a role. UIG concluded they could invest in the project by providing all of the private financing. However, an important factor in the project’s success was knowing that community leaders and public stakeholders had participated throughout the planning process.
UIG believed the project provided an opportunity to develop an economically sustainable, mixed-income neighborhood that could serve as a catalyst for additional investment in New Orleans. UIG worked together with McCormack Baron Salazar, the U.S. Department of Housing and Urban Development, the Housing Authority of New Orleans and the Louisiana Housing Finance Agency to structure the project financing. UIG closed its $58 million equity investment in the development, renamed Harmony Oaks, on December 31, 2008.
Harmony Oaks now contains 460 apartments and townhomes in 116 residential buildings and includes green spaces, playgrounds and a community center. Adjacent properties are also being developed by retailers, helping to create a more vital and sustainable community. The investment is a step forward for the city and displaced residents, with many former C.J. Peete residents returning to live in Harmony Oaks.
Sustainable Communities and Workforce Development
The investment in Harmony Oaks is a good example of UIG’s investment strategy and approach. Created in 2001, UIG invests in urban communities with the goal of creating self-sufficient neighborhoods that provide housing, retail, social services and job opportunities for all residents. In New Orleans, UIG had a like-minded participant in McCormack Baron Salazar, which helped ensure the long-term viability of the project by addressing the needs of Harmony Oaks as well as the surrounding community.
To assist in achieving these goals, UIG also made a grant to the non-profit group, Urban Strategies to finance a workforce-training program for local residents. Local residents were offered courses in adult literacy and aspects of the construction trade, preparing them for employment in the region as New Orleans and the Gulf Coast continues to rebuild.