Tom Delahaye

Tom Delahaye

Tom?Delahaye spent more than 20 years practicing law in Louisiana before deciding in 2006 to devote his professional energies to real estate development and property management.

In the years since, his CST Multifamily Real Estate Services has developed more than 2,000 apartment units across south Louisiana and east Texas, roughly half of which are affordable and workforce units. That means they are set aside for tenants who earn somewhere between 30% and 80% of the area’s median income, which in New Orleans is about $46,000 a year.

To date, most of Delahaye’s projects have been in the capital region, Lake Charles and Houston. But CST is planning to move into the New Orleans market in 2024 with a 140-unit workforce housing complex planned for a site on the west bank of Jefferson. With affordable housing such a growing concern in the city and elsewhere around the country, we wanted to talk to?Delahaye about what it takes to get affordable housing deals done and why more developers aren’t doing it.

In this week’s Talking Business, he explains why affordable housing is such a challenge and how he’s been able to make the numbers work.

Interview has been edited for length and clarity.

Walk me through the process. Say I want to develop an affordable complex. What do I do?

Get your land, pick a good location, do all the due diligence, zoning, wetlands, whatever those things are. Then you have to find a tax-credit syndicator, like PNC Bank out of Pittsburgh, which is our syndicator. They syndicate federal Low-Income Housing Tax Credits, and that will cover your down payment. Then, you have to find a lender, like a traditional bank. Sometimes, the syndicator and the lender will be the same. Sometimes, they’re different.?It helps if you already have a healthy balance sheet. The tax credits will cover about 50% of your deal. The loan covers much of the rest.

What is the average income range of the tenants you build for?

It can go as high as 80% of AMI, which, depending on the parish or county, can go up the $50,000 range. We also go as low as Social Security and no other source of income. So it all depends on your location.??

Why aren’t more people doing it? Is there not enough profit in it?

It’s complicated, stacking all the financing and dealing with the tax credits. You have to surround yourself with a lot of smart people, who know what they’re doing. I have a good team that has helped me. But it's just very complicated is the simplest answer. Developing market rate projects is complicated today too, especially with construction costs, interest rates and insurance.

How are those financial pressure points today affecting workforce and affordable housing deals?

They’re having an impact on the deals, no doubt, but with affordable projects you can get gap money from agencies like the Louisiana Housing Corp. to close the gap between what the tax credits cover and what the loans cover. The LHC has HUD Community Development Block Grant money that they will put into deals as a soft second, behind the first mortgage holder and provide funding for that. That’s really important because construction costs are through the roof and insurance costs have gone from $150,000 per complex to $400,000 per complex in just a year.

Everybody acknowledges the need for more workforce or affordable housing, but nobody wants it in their neighborhood. How much of a problem is NIMBYism?

It’s different from parish to parish, neighborhood to neighborhood, but you do encounter a lot of push back. We deal with it by sticking to our word and building affordable housing that is exactly like market rate housing. It ends up costing us more, but the projects sell themselves and if neighbors know they are going to have apartments in their neighborhoods that are more than just cement blocks, they’re more supportive. If you take a look at some of our projects around the area, the units have all the amenities that you would find in a market rate unit. It looks like a place anybody would want to live.

Tell us a little about the project you have planned for the New Orleans area.

It’s still early, but we have a site on the West Bank of Jefferson that will be roughly 140 units and we hope to break ground in 2024. There is tremendous need in that market. We wouldn’t doing it if there wasn’t demand.?

Why do you do it?

I enjoy it. I feel like we’re helping those who are most in need. My partners and I make it a point to build safe, clean, new product that people want to live in, and we replicate from market to market what we have already done and proven can work. We don’t try to do something different every time. We build quality product so when our customers walk in they say, “This is fabulous. I want to live here.”

Email Stephanie Riegel at [email protected].