As the cost of living in New Orleans continue to rise, pressuring low-income families to give up homes they have held for years, the city has a dedicated tax that raises nearly $4 million a year intended to promote affordable housing.

But that money, City Councilwoman LaToya Cantrell told a standing-room only crowd Wednesday night, is instead being spent by the city on code-enforcement efforts — which can actually increase the pressure on poor families to sell their homes in gentrifying neighborhoods.

The city’s Neighborhood Housing Investment Fund was a created in 1991 by a 30-year property tax that at the time generated about $3 million per year, but now amounts to $3.9 million annually because of rising property values. It had three intended uses, according to the city code:

to “provide financing and other assistance for home-ownership opportunities for families and individuals” in their homes,

to “promote neighborhood stability by eliminating blight and unsafe and deteriorating conditions,”

and to “provide financing and other assistance for safe, affordable rental housing” for low-to-moderate-income residents.

But instead, Cantrell told the audience at “The Big Issue” panel on gentrification Wednesday night at Tulane Hillel, that money is going to code-enforcement activities that can subtly encourage the poor to sell their homes.

“It’s supposed to be tied to affordable housing,” Cantrell said at the forum. “Well, right now, that millage is paying for a lawyer in code enforcement.”

While Cantrell — both as a Broadmoor neighborhood leader and a city council member — is an advocate for property maintenance (for example, as a proponent of stronger inspections of rental properties), she said that code-enforcement can also add to the pressure low-income residents feel to move out of gentrifying historic neighborhoods. As houses are bought up and renovated, new residents may complain about the conditions of occupied homes, and a visit from Code Enforcement officials could serve as additional pressure for the long-time residents to simply sell and move somewhere cheaper.

“All of a sudden, somehow code enforcement is on them a little bit strong,” Cantrell said. “The 70-year-old is getting fines for her shutters, because the paint is peeling. They’re feeling the pressure.”

It is unclear how long it has been since the Neighborhood Housing Investment Fund was used for its intended purposes, Cantrell said. But one indication comes from the fact that its allocation was supposed to be governed by a board called the Neighborhood Housing Advisory Committee, made up of nominees from a number of organizations, some of which no longer exist.

That committee, then, is supposed to create a five-year plan for use of the money, Cantrell — another aspect of the law that has long been ignored.

“The ordinance says there’s supposed to be a strategic plan in place around affordable housing and that money – a millage that people are paying. But right now there’s no plan,” Cantrell said at the forum. “So right now, the Council can’t do its job or isn’t doing its job, because the ordinance isn’t being followed by the administration.”

Cantrell held an initial hearing on the use of the Neighborhood Housing Investment Fund before her Community Development committee in February, attended by a number of other City Council members. That meeting, she said, was the first step toward bringing the city back into compliance with its own law governing the money through the course of this year.

[Update, 7:14 p.m. Thursday: Mayor Mitch Landrieu’s office did not respond to Cantrell’s specific points about the governance of the Neighborhood Housing Investment Fund, but said the money has been used “to follow all three” of the ordinance’s provisions. “Over the years, the City has used the funds to fight blight, including legal costs, but it has also used the funds for home modification programs for homeowners with disabilities and to support the City’s match of the federal HOME program that funds building, buying, and/or rehabilitating affordable housing for rent or homeownership or providing direct rental assistance to low-income people,” wrote Bradley Howard, a spokesman for Landrieu.]

Reclaiming the fund for affordable housing projects is only one proposal discussed by the panel Wednesday. Cantrell also mentioned the controversial Housing Authority of New Orleans “scatter sites,” hundreds of individual properties owned by the agency in neighborhoods around the city. The previous director had intended to sell them at auction, but new HANO director Greg Fortner wants to use them for affordable housing instead.

The idea of HANO redeveloping those sites has drawn sharp criticism from Councilwoman Stacy Head and others who believe the agency has allowed them to languish and become magnets for crime. Cantrell, however, said that proper use of them by the government is one of the last bulwarks against rising prices in some neighborhoods.

“Some people feel like they need to be sold at market,” Cantrell said. “Are you kidding me? We have to have a plan to deal with those scatter sites in our community, because right now it’s starting to be the only piece of land that we know can be affordable.”

Another panelist, Flozell Daniels of the Foundation for Louisiana, jokingly agreed that in New Orleans, “‘plan’ is the other four-letter word.” But the scatter sites, he said, do represent a ripe opportunity for mixed-income rental housing.

“The HANO project is the perfect opportunity to do something,” Daniels said.

While numerous opportunities exist for tax credits, small-business loans and other initiatives to help residents participate in the benefits of rising property values, Cantrell said it is most often longtime residents who do not know how to access them, while developers and transplants take advantage of them. The city should do more, she said, not only to create those programs, but to create a case-management system that ensures low-income families have all the assistance they need to participate in them.

“It’s not, ‘Here, here’s the paperwork,” Cantrell said. “It’s literally helping them create the paperwork, dot the i’s, cross the t’s – that’s what’s been missing.”

Gentrification and rising rents are often understood as an effect of the housing market, but a theme of Wednesday’s panel is how often those forces are driven by the government action as well. Property long ago deeded to the city for schools is now being sold at auction to private developers to become luxury apartments, sometimes below the properties’ assessed values.

Vance Vaucresson, owner of Vaucresson’s Sausage Company and a partner in the residential redevelopment of a major Seventh Ward site, noted the long history of the routing of Interstate 10 through New Orleans. After preservationists kept it out of the French Quarter, it was built along Claiborne Avenue instead, destroying the predominantly black neighborhoods in its way.

Now, Vaucresson noted, with the original residents long gone, the city is engaging in “Livable Claiborne Communities” discussions about how to bring people back to those areas.

“You can’t think everyone’s going to fall for the okey-doke,” Vaucresson said. “The area’s being tendered for redevelopment.”

As those government initiatives pile up, it becomes readily apparent how much gentrification, rising property values and the growing inaffordability of housing is being driven by policy choices, said University of New Orleans professor Renia Ehrenfeucht.

“It’s not only a market process,” Ehrenfeucht said. “There’s always this public sector contribution to it as well.”