If real estate investors saw New Orleans as a gold rush town in the months following Hurricane Katrina, then the city's fractious political climate and tortured recovery had begun to chill their enthusiasm by early 2007.

Such was the experience of Matt Schwartz, a Tulane graduate and 30-year-old developer who watched potential lenders slip away as the city's struggles were refracted through the national media. If not for the efforts of a fellow Tulane alumnus, he might not have succeeded with three apartment projects that seem poised to transform a core section of downtown.

Schwartz and his business partner appealed to Justin Ginsberg, a Tulane graduate who runs the affordable housing division at Centerline Capital Group in New York. Ginsberg brought Centerline investors to the city for a two-week roadshow in which they met with leaders from the port, restaurant industry and other major business sectors.

The spectacle worked. Centerline agreed in June to provide more than $56 million in debt and equity financing for two apartment buildings with a mix of affordable and market-rate units. The company later invested in a third building that will consist entirely of affordable units. Construction has started on all three complexes, which will have a total of 480 units when they are completed at the end of the year.

"We knew Matt and felt he was the right partner for our first affordable transaction in New Orleans," Ginsberg said. "I was impressed with the outreach (he and his partner) did in the neighborhoods and their efforts to gain local support."

Schwartz and his partner, Chris Papamichael, 33, have pulled off some of the most ambitious residential developments going up in the city by working alumni connections and making savvy use of tax credits, block grants and other government subsidies created after Katrina. Their portfolio of projects has the potential to recast Tulane Avenue, now a corridor of derelict motels and bail bond outlets, into a desirable neighborhood in walking distance of downtown hospitals, law firms and restaurants.

In addition to three major apartment complexes -- the Preserve, the Crescent Club and the Meridian -- Schwartz and Papamichael have bought more than 20 double- and single-family houses and small retail stores between Tulane Avenue and Banks Street, an area that suffered heavy flooding during Katrina and remains mostly dark at night. They plan to renovate and sell some of the houses, and replace others that can't be salvaged with modular homes that emulate traditional New Orleans architecture.

"That area had a high renter occupancy before the storm, and it's been one of the slowest to recover. We were concerned that there would be a large apartment building, but that the area around it would not appear safe," said Jennifer Weishaupt, president of the Mid-City Neighborhood Organization. "They undertook the purchase of private homes so everything would start moving upward."

In addition, the pair renovated St. Patrick's Park, home to the only baseball fields in Mid-City since the storm, and recently purchased the former Gold Seal Creamery on South Alexander Street. They plan to turn that building in the shadow of the Preserve into artists' lofts and gallery space.

All of these projects are in spitting distance of the two new hospitals the state and the U.S. Department of Veterans Affairs hope to build by 2012 -- the largest development the downtown area has seen in a generation. Schwartz and Papamichael said the nurses, medical residents and researchers who work at the hospitals, not to mention students from nearby Xavier University, will create a natural market for their buildings.

The pair, who work under the business name the Domain Companies, believe Tulane Avenue has potential beyond its current mix of slatternly businesses because of its proximity to major transportation arteries such as Interstate 10, Carrollton Avenue, Jefferson Davis Parkway and Broad Street. Regional planners have discussed widening the neutral ground on Tulane itself, a step that would create more green space and ease congestion by allowing drivers to make left turns.

"Looking at an aerial map of the city, it seems obvious," Schwartz said. "Tulane Avenue is a 25-block thoroughfare that dead-ends into downtown -- into the future of the city."

Schwartz speaks of the Domain projects in visionary terms. When his buildings open at the end of the year -- and when the nearby Falstaff development opens at Tulane and Broad -- he said residents should start to feel comfortable walking to work downtown. That part of the city would become truly urban -- that is, it would lose its total dependency on cars.

Schwartz believes he will draw tenants from upwardly mobile groups like medical residents who could perhaps afford to buy but are not ready to settle down. He said buildings that offer renters amenities like swimming pools, luxury kitchens and "green" construction are common in cities like Austin, Texas, and Dallas but relatively new to New Orleans.

Also relatively new is Domain's experiment with mixed-income housing. Before Katrina, the state offered developers subsidies mainly to build low- to moderate-incoming housing. Since the storm, a new host of incentives has allowed the pair to expand the city's inventory of mixed-income buildings. In all three of their buildings, the subsidized units will be geared toward what Schwartz called the "work force" -- teachers, police officers, medical students -- rather than to low-income people.

Schwartz and Papamichael are half local, half transplant. They grew up three years apart in the same New York suburb, Syosset, but they did not become friends until they landed in the same fraternity at Tulane. Today they divide their time between New York City and a Warehouse District loft that doubles as an office and pied-a-terre. Both claim a fierce loyalty to New Orleans; Schwartz and his wife, Christa, were married here in 2005.

"We are not just developers coming to take advantage of tax credits. We love New Orleans and want to see it developed the right way," Schwartz said. "We consider ourselves based here.

"We're bullish on the city's long-term prospects, given its unique assets -- the port, tourism, the universities that fuel the bioscience industry," he continued. "Housing is the piece that's missing to keep the fire burning. There will be no way to take the city to the next level, from recovery to growth, without more housing."

To the partnership, Schwartz brings a background in real estate finance. Papamichael, whose father also works in the real estate business, handles site acquisition and assembles the team of architects, engineers, contractors and interior designers who will work on the buildings.

After they graduated from Tulane, both went to work for major real estate firms in New York -- Schwartz to the Related Companies, a firm affiliated with Centerline Capital, and Papamichael to W&M Properties, which owns the Empire State Building.

"Matt brings significant tax credit experience having worked at the Related Companies. He was a significant player in their affordable housing area," said George Perry, director of investments at W&M. "Chris was a valuable member of our team. He helped source, evaluate and underwrite opportunities, and I'm sure he's using those same skills in New Orleans. My sense in knowing Chris is that he's got a very good eye."

The two struck out on their own in 2004, focusing initially on multifamily housing developments in New York City and upstate. They won a city contract to redevelop Markham Gardens, a dilapidated public housing project in Staten Island, N.Y., and built a mix of rental and for-sale units in Ithaca, N.Y., that was the first development in the state to use tax credits for energy-efficient construction. All of their projects in New Orleans are built to green standards as well.

"We have both lived in New Orleans and understand how the city works. An outsider may know New Orleans only as a travel or convention destination, but there's a lot more to the economy than that," Papamichael said. "There are things about the city that are irreplacable. We're confident it will recover."