Document Type

Capstone Report

Publication Date

Spring 5-1-2014

Abstract

In spring 2014, The New Orleans Redevelopment Authority (NORA) requested that the UNO-PLUS Community Development Finance Capstone Study Team research creative funding mechanisms to finance the upfront investments required for large-scale blight reduction efforts. Specifically, NORA tasked the study team with identifying mechanisms to finance the title clearance services necessary for property disposition and the infrastructure investments required to implement cost-reducing alternative land management strategies for 310 properties. Our analysis found that of these 310 properties, NORA acquired 295 through expropriation and 15 through adjudication. This report presents NORA with four distinct strategies for the effective dispo­sition of these 310 properties, two of which involve the use of a relatively new financial instrument known as a Social Impact Bond (SIB). SIBs are not tra­ditional, fixed-rate-and-term security bonds such as municipal bonds; rather, SIBs more closely resemble a rigorous, performance-based contract between multiple parties, that combines aspects of both debt and equity. Unlike perfor­mance-based contracts, SIBs use private investment to fund the upfront costs, and reduce the burden placed on taxpayers, of preventative services that de­liver long-term cost savings. Although SIBs have been used for people-based programs, our research suggests that the model’s flexibility potentially allows for its application to place-based programs such as blight remediation. After conducting a spatial analysis of the characteristics of NORA’s lots, we divided these 310 properties into groups based on their physical features and the market conditions of the neighborhoods in which they are located.

Comments

Spring 2014 - MURP 6720 Community Development Finance Capstone

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