KB drops New Orleans housing plan

You might recall plans first announced last year by the L.A.-based home builder to develop thousands of homes on a 3,000-acre tract in Jefferson Parish, which is part of metro New Orleans. Well, the deal is dead - KB let its contract to purchase the land expire. A KB spokeswoman told the New Orleans Times Picayune that the company couldn't come to terms with Joseph Marcello, owner of the land. A lawyer for Marcello speculated that a downturn in the housing market and KB's declining stock price might have been factors. Perhaps, but there could be another explanation: the absence of former KB Chairman and CEO Bruce Karatz, who had been spearheading the New Orleans project. "We want to rebuild New Orleans," he said in first announcing the development. Here's what he told USA Today earlier this year:

We are the only large company who has announced any new development of any considerable size in New Orleans. We're now seven, eight months into post-Katrina, and we're the only ones that have stepped up. I honestly think that's part of the problem with New Orleans: It's a weak business community. And I personally felt it was important for a company like ours to do something, because if we waited for others, we could be waiting a long time. And if we're successful, it will motivate others.

KB has acquired other land outside New Orleans and still plans to develop housing communities. This month KB dropped out of another high-profile project: a 54-story hotel and condo tower that's the centerpiece of the L.A. Live complex, right next to Staples Center. That, too, was being pushed by Karatz, who was forced out over the stock options scandal that's now the subject of federal inquiry. AEG, the sports and entertainment development arm of the Phil Anschutz empire, has bought out KB's stake in the project and will develop the tower on its own. KB said it was bailing in order to focus on its core homebuilding business.