Before Hurricane Katrina hit, the “Big Four” public housing complexes in New Orleans—C.J. Peete, Lafitte, St. Bernard, and B.W. Cooper—were targeted for leveling by locals. Then Katrina drenched them. The irony is that while buildings all around the city are being torn down, these four structures, which total more than 5,000 units, remain standing.

“No one was suggesting these were the best places to live,” said Tom Murphy, a senior resident fellow with the Urban Land Institute. “I think people believed they were old before the storm. By the time you would do an extensive rehab, you might as well start over.”

Others see the same things. “These are old structures,” says Larry Schedler, a broker in New Orleans. “The numbers that I see about what it costs to renovate these deals is obscene. You could build Class A apartments for that.”

BIG TROUBLE: After Katrina drenched the Lafitte public housing complex (left), plans were made to provide new housing in the Treme community. So, why are these buildings still standing? Simple. It's litigation. After the Housing Authority of New Orleans announced plans for a $681 million redevelopment of the buildings, residents filed a civil rights lawsuit. Their argument: HUD is violating their property and constitutional rights by planning to demolish the complexes without proper notice and while they still hold leases, according to The Times-Picayune in New Orleans. The legal organizations working with the residents didn't return calls from MULTI FAMILY EXECUTIVE.

HUD has given approval for the housing authority to partner with Providence Community Housing in New Orleans and Enterprise Community Partners in Washington, D.C., to replace Lafitte with mixed-income communities. “One of the goals is bring all 865 residents living in Lafitte back to the Treme community, though they may not be on the site,” says Donna White, a spokeswoman for HUD.

Meanwhile, HUD temporarily fixed some units in B.W. Cooper, which houses about 40 families. “We're doing that on an immediate basis because there's such a need,” White says.

The problem for the New Orleans Housing Authority, which is run by HUD, is that it can't begin building new housing until the suit is settled. “Out of respect for the courts, we're at a standstill,” White says.

SHORT FIX: HUD renovated some units in the B.W. Cooper complex. HUD agrees with those who say the storm damage has made units in the four complexes far too expensive to repair. But ULI's Murphy also understands why the residents are frightened about losing their homes. For one thing, he says, housing is nearly impossible to find in the Crescent City after the storm. For another, many public housing residents may be feeling a sense of déjà vu after what happened at the St. Thomas projects, which were redeveloped under Hope VI.

“That was a really bad experience for affordable housing residents,” Murphy says. “Very few public housing residents ended up having opportunities to live in the new development. So, affordable housing advocates have a very skeptical view of this stuff.”

HUD knows this history, though, and White says the agency taking steps to ensure that residents aren't kicked out in the wake of a great tragedy like Katrina. “[HUD Secretary Alphonso Jackson] has promised all residents living in public housing that they will have the opportunity to come back to a unit,” she says. “That will either be a public housing unit or one that Section 8 can support [like a voucher].”