Derbigny Street: A Culinary Destination
Derbigny Street is the test kitchen for New Orleans’ $2.3 billion culinary economy. Along this mixed-use corridor, residents and visitors select between over two-dozen restaurants catalyzed by the Lafitte Fare Food Incubator (LFFI). An urban design scheme scaled for pedestrians and a mix of hotel, residential, retail, and commercial uses ensures a lively and safe neighborhood in which to live, visit, work, and — most importantly — EAT! The twice-weekly Lafitte Market is always busy with local residents, hospital workers, and visitors who know the produce is fresh because of the discerning chefs and restaurateurs who shop there. Anchored by a new transit shed on Canal Street and the beautiful Lafitte Greenway, Derbigny Street celebrates the spirit of New Orleans and it’s culture, while looking forwards towards how that spirit will continue to evolve.
An intimate urban design scheme provides curb bump outs planted with rain gardens at intersections and bio-swale brimming with street trees offering shade from the Louisiana sun for patio diners and pedestrians. This storm water management system will help to replenish the city’s groundwater and help fight subsidence that causes over $2 billion in infrastructure damage while minimizing stress on storm water infrastructure. Retail and restaurant entrances are designed to protect against flooding in this low-lying zone.
The Lafitte Fare Food Incubator (LFFI)
“Successful business ownership offers the opportunity to create equity and wealth, rather than just receive a paycheck for a job.” -LCC
The LFFI adapts common models from startup culture to celebrating and redefining the city’s culinary heritage. Aspiring restaurateurs from all neighborhoods and backgrounds will share kitchen, office, production, and retail space and receive business, legal, and management advice — minimizing risk by testing and maturing their concept before opening. Entrepreneurs from the incubator will fill Derbigny Street and create an exciting culinary destination.
The Incubator will also help overcome common barriers to economic stability by providing neighborhood residents job training and affordable day care. Trainees are paired with entrepreneurs and local restaurants for hands-on experience and work on Derbigny Street, opening doors for economic empowerment.
Financial Proposal
The development site maximizes the land use opportunity and will generate attractive returns for equity investors, neighborhood partners, and developers. The overall development is projected to achieve an IRR of 20% over a 10-year hold with an exit cap at 6.25% without any public subsidy or tax credit contributions. The annualized cash yield for the development project is projected to see a weighted return of 6%. The project is assumed to be developed over the 10 year hold in three phases and stabilized by the end of year 9. The initial costs of the development project is $170 million. Construction will commence at the beginning of year 1 and will be financed through a 10-year interest only, $110 million construction loan. Based on a LTV of 65% on the loan, $59 million of equity capital will need to be raised from investors or other capital partners. $11 million of this equity contribution could be offset by tax credits.
Program Specifics
To capitalize on the ongoing development of the University Medical Center and Veteran Affairs Hospital Complex, the proposal includes the acquisition of parcels “A, B, and C” to create workforce and market rate housing, ground floor retail, and a hotel for individuals and families employed by the medical complex. As lease up begins and continues throughout the project horizon, units will be coming online for sale as well as by lease to support the debt service. To encourage local business growth, ground floor retail coming online will offer short term leases with rollovers to a five-year option after the initial lease term expires. In addition, many of the retail units will be leased out to start-up restaurants with significant support from the development team. In return, the development team could hold an equity stake in these start-up restaurants similar to how venture capital funds tech start-ups.
In addition to the affordable and market rate units along Canal Street, condominium units along St. Louis Street will be developed to capture the market demand from construction of the Lafitte Greenway. The development of these units anticipates the traffic within the area as a result of the public land uses and new infrastructure being put in place.
Implementation: This project will be completed by developers partnering with the North Claiborne Neighborhood Improvement Association for a stipulated fee, which is built into the attached development costs. As part of the development, the developer will upgrade Derbigny Street to be an active pedestrian street with integrated storm-water management. Uses developed in each of the parcels are primarily use-by-right and only two buildings will require zoning variances.
