By 2005, only the 1955 expansion had been razed. The majority of the remaining buildings were vacant and fenced off, with only a portion still occupied, when the area flooded in the aftermath of Hurricane Katrina (see: Effects of Hurricane Katrina in New Orleans). Redevelopment work has been delayed in the aftermath of the disastrous flood which devastated the majority of the city. As of late 2008, the Magnolia Projects had been vacated and the majority of buildings razed.On January 7, 2009, local, state, federal and HUD officials met to break ground on a new $183 million C.J. Peete community meant to replace the Magnolia Projects. The plans include 460 units, a Recovery School District school and YMCA in the first phase. 2/3 of the community will be mixed-use and mixed-income, with the rest being market value apartments and town homes.
In 2011, the rebranded Harmony Oaks community developed by McCormack Baron Salazar opened as a mixed-use community of 460 apartments and homes including public housing, low income and market-rate dwellings. The new Harmony Oaks, redeveloped on the old Magnolia Projects site, is located on some 41 acres southeast of the intersection of Claiborne and Louisiana Aves. The site is bounded by Washington Ave. to the east, LaSalle St. and Freret St. to the south, Louisiana and Toledano Aves. to the west, and S. Claiborne Ave. to the north. The redeveloped projects is a continuation of New Orleans' move towards new urbanism favoring urban neighborhood development over suburban sprawl.
The various New Orleans housing projects are most notable for being the launching ground for Bounce Music and New Orleans Rap. The most well-known artists to come out of the Magnolia Projects are Birdman, the late Magnolia Shorty, new known rapper going by the name of neno clavin Juvenile and Turk of the Hot Boys, a former rap group who started their careers on Cash Money Records, as well as rapper Jay Electronica. The label shot to fame in the late 1990s and still is popular today. Other popular artists from the area include Soulja Slim, and Mr. Marcelo. The district is often referred to as Magnolia or Nolia. The Magnolia has been the scene of Juvenile's hit song Nolia Clap, a dance inspired solely by the Magnolia Projects. The Magnolia Projects has also been home to sculptor Willie Birch. The park on La Salle in the Projects, A.L. Davis Park, has long been a frequent site of brass band parades, and an important gathering site for Mardi Gras Indians tribes. Under the old name of Shakespere Park (originally commemorating New Orleans mayor Joseph A. Shakspeare) it is mentioned in the lyrics of Professor Longhair and Papa Celestin.
In the 1990s and early 2000s, the projects were often cited as among the country's most dangerous. To make it safer, the landlords began taking a harder line on policies, mandating a one-strike rule for residents when it comes to violating lease agreements.