An evaluation by an outside company found several flaws with the first public appraisal conducted on a house in Gordon Plaza, a New Orleans neighborhood built on top of toxic soil.
A letter by ARC Appraisers provided an overview of possible problems within the city's appraisal based on federal and state standards at the request of Gordon Plaza residents. Chris Baker, the company’s chief appraiser, clarified that the letter didn’t serve as an official review of the report, which requires more scrutiny.
“There are numerous issues with this report, and the items pointed out are what is easily recognized without spending a great deal of time on the overview of this report,” wrote Baker in the Oct. 30 letter.
The thorny question of how to properly appraise houses built on a toxic landfall is at the center of the long-running battle over how to relocate – and fairly compensate – Black residents who purchased homes in Gordon Plaza.
Earlier this month, city-hired appraiser Jim Thorns valued one 2,898-square-foot, brick house in the subdivision at $358,000. The city’s offer matched his appraisal and didn’t include moving costs. He based that value largely on the sales prices of what he deemed as comparable homes in nearby neighborhoods, including Pontchartrain Park and Gentilly Woods, in an attempt to remove the influence of the area’s environmental hazards.
The letter seemed to affirm Gordon Plaza residents’ immediate concerns that the three houses selected to serve as comparisons didn’t measure up to the home being appraised. During Monday’s Gordon Plaza Task Force meeting, Thorns said he hadn’t had a chance to review the letter but promised to respond to the concerns by Wednesday, Nov. 2.
Organizer Angela Kinlaw, who works with Gordon Plaza residents, said Baker volunteered to evaluate the city's appraisal pro-bono. In his letter, Baker noted that the comparable houses were substantially smaller than the subject property, and sat in higher-risk flood zones than those in Gordon Plaza – requiring flood insurance and likely lowering their value.
The preliminary letter also found several potential violations of the Uniform Standards of Professional Appraisal Practice – the standard for all appraisals for federally-related real estate transactions — in part due to the use of outdated forms and methods, along with the inclusion of “misleading” statements.
For example, the city's appraisal stated the valuation was based on the home's current condition following an interior and exterior inspection, though Thorn was only allowed outside the house. Baker called that statement hypothetical and misleading.
Thorns’ appraisal method valued the 2,800-square-foot house in Gordon Plaza far higher than the neighborhood’s going rate, but residents said it was still a far cry from a fair valuation, noting that $358,000 wasn’t enough to cover all the costs associated with relocating.
In December, an analysis by experts from Tulane University’s Department of Sociology and School of Architecture, as well as a local real estate broker, found that the median sales price for a home in Gordon Plaza since 2000 has sat around $72,000. Meanwhile, the median sales price across the city sits around $360,000 in the first six months of 2022.
That’s why residents and Council members have pushed the city to use replacement cost to value their homes – or appraise based on how much it would cost to construct the house from scratch. Thorns’ sales comparison approach is the appraisal method used in most real estate transactions, which is when appraisers rely on comparing a property’s worth to other similar, recently sold homes.
The residents argued that the replacement or construction cost metric would yield results closer to what their homes would be worth if they weren’t located on top of a retired landfill.
In the Oct. 30 letter, Baker noted that while some cost approach might have been incorporated into Thorns’ appraisal, it was insufficient to form a credible opinion of value. He also suggested changing the report to include the third method known as an income approach, which bases the value on potential revenue. That method is typically reserved for commercial properties versus residential ones.
He also recommended including a separate valuation of sites in comparable, non-flood prone areas, and noted that the original appraisal was likely crafted too quickly as Thorns dated both the inspection and appraisal report with Oct. 13.
“One day is not sufficient time to complete an assignment of this type,” Baker wrote in the letter.
Gordon Plaza residents have called for relocation since the 1980s when they learned they were living on top of a hazardous site. Located in the Desire neighborhood, Gordon Plaza is the last populated neighborhood on the former site of the Agriculture Street landfill, home to 67 properties. The area once hosted a public housing development called Press Park, a senior housing complex and an elementary school that were all shut down after Hurricane Katrina.
The EPA found that the soil was laced with more than 50 hazardous compounds such as arsenic and lead caused by five decades of waste disposal there. Despite cleanup efforts, residents said they haven't been free from illness. This year, the Louisiana Tumor Registry found that the Desire area, of which Gordon Plaza is a part, had the second-highest rate of cancer in the state.
The Cantrell administration plans to convert the Superfund site into a renewable energy park and buy out residents in the process. In late June, the City Council set aside $35 million to fund the effort. On Monday, Gordon Plaza leaders pledged to send Thorns a list of all residents interested in having an appraisal completed for their properties to expedite the process.
To provide money for moving, the New Orleans City Council also plans to vote on creating a Gordon Plaza Relocation Assistance Fund on Thursday after several delays. Councilmember JP Morrell, who authored the legislation, said once that fund is created, the council will work with the city administration during the budget process to allocate money and gain approval for distribution as residents accept buyout offers.
The next Gordon Plaza Task Force meeting has been scheduled for Nov. 11 at 2 p.m. at City Hall.
