Land Use

Two years after city funds Lake Terrace, owner behind on taxes

A recent visit revealed no evidence of ongoing work at the Lake Terrace Shopping Center, which has been shuttered since Hurricane Katrina. Photo by Karen Gadbois

In a press release issued last week, Mayor Mitch Landrieu’s administration prided itself on a recent decision by Judge Lloyd J. Medley Jr. to uphold fines imposed on a taxpayer financed developer who has failed to bring a lakefront strip mall back into commerce years after Katrina damaged it.

The city lauded the ruling as a victory in the Landrieu administration’s war on blight, evidence that it has “aggressively pursued” measures against the strip mall owner, including fines of $15,575 affirmed by Medley.

What the press release didn’t say was that the city continued to award money to the developer after Landrieu took office—five years after Katrina—and that it has failed to collect more than $100,000 in back taxes the developer owes on the strip mall and another dozen properties scattered across the city.

The Lake Terrace Shopping Center, at the corner of Paris Avenue and Robert E. Lee Boulevard, is adjacent to some of the city’s priciest lakefront real estate and has long been a source of frustration to nearby residents. The city moved against DMK in June, on grounds that the strip mall was blighted and a public nuisance.

DMK Acquisitions and Properties LLC acquired the mall in 2007 for approximately $2.5 million borrowed from First NBC Bank.

DMK owner Kenneth Charity then sought $1 million from the city’s taxpayer-financed Economic Development Fund and was subsequently awarded $250,000.

In June of 2009 DMK collected a first installment of $100,000 from the promised $250,000, followed in October of that year by a check for $62,500.

In a January 2010 story in The Lens, Thomas Nash, the city official who managed the development fund for the Nagin administration, defended the award, saying that Charity had spent the money on “soft costs” such as permits and architectural plans.

In May 2010, a week after the Landrieu administration took office, the city cut another check to DMK for $62,500, bringing the total outlay of taxpayer money for this project to $225,000.

In addition to the June 2012 judgment upheld last month, DMK still owes $35,000 in back taxes on the property, with another $31,000 due this month for the current year. Charity also owes $98,000 in back taxes on another 11 properties.

Through an attorney, DMK’s Charity declined to comment for this story, but he is not alone in continuing to benefit from city programs while remaining delinquent on his taxes.

Janet Howard, head of the Bureau of Governmental Affairs, a nonprofit research group that keeps a watchdog eye on City Hall, argues that developers “not current on their taxes or other obligations to the city” should not be given city incentives.

In a 2009 letter to the City Council, the BGR assailed the Economic Development Fund itself, calling it “badly flawed. It creates unnecessary risks of waste, political favoritism and giving chosen businesses unfair competitive advantages.”

The council subsequently killed the fund and set up a small-business loan program.

Asked if the city had a mechanism to collect back taxes when they issue permits, mayoral spokesman Ryan Berni said he was unaware of any such process.

Back on track?

The strip mall’s prospects are brightening, perhaps with help from yet another dose of taxpayer funding. According to Greg St. Angelo, legal counsel for First NBC Bank, a high-end food store has agreed to become the anchor tenant.

Maybe so. In January 2011, St. Angelo said the ink was drying on an agreement with Charles Ciaccio, owner of Lake Terrace Fine Foods, to set up shop once DMK completed the buildout.

Ciaccio could not be reached for comment, but in a letter to Charity following the June 7 code-enforcement hearing, St. Angelo said Ciaccio was waiting on additional funds from the city under the Fresh Food Retailer Initiative, a taxpayer-funded Landrieu program that is meant to bring grocery stores into low-income neighborhoods.

But according to Aimee Quirk, an economic development adviser to the mayor, Ciaccio “refused to sign a personal guarantee to secure the [Fresh Food Retailer Initiative] loan,” and was therefore ruled ineligible for the financing. Quirk said the city subsequently invited Charity to apply for a food-retailer loan but has not heard from him.

When contacted last week St. Angelo said Ciaccio is “anxious to open the Lake Terrace Fine Foods just as soon as construction is complete.” St. Angelo added that “construction has finally begun” and said Medley’s affirmation of the city’s fines for blight may be appealed but at this time “seems moot.”

A visit to the site revealed no work in progress. Meanwhile, the permit required for continuing reconstruction of the strip mall has expired.

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About Karen Gadbois

Karen Gadbois co-founded The Lens. She now covers New Orleans government issues and writes about land use. With television reporter Lee Zurik she exposed widespread misuse of city recovery funds and led to guilty pleas in federal court. Her work attracted some of journalism's highest honors, including a Peabody Award, an Alfred I. duPont-Columbia Award and a gold medal from Investigative Reporters and Editors. She can be reached at (504) 606-6013.

  • jeffrey

    I’d like to know more about how a program designed to “bring grocery stores into low-income neighborhoods” extends eligibility to a high-end grocer in Lakeview.

  • Eric

    Ironic isn’t it?

    I don’t get why the guy isn’t throwing money into this to get leasers in. Half of lakeview passes by there everyday as well as a whole bunch of UNO folks. Plenty of disposable income around there… Drive through coffee place (preferable of the local variety), some nice food places like they have out by the Rouses on Franklin, small little grocery store.

  • creole 65

    I wish I were friends with a banker who would make it posible for me to get funds to purchase distressed property. Then, I could apply for funds from the city ,state and federal goverment to get my perments and pretentd I am going to open a business. Meanwhile, permits sure don’t add up to the amount of money recieved thus far. So the game is played over and over again and the fools at city hall just keep writing the checks. Meanwhile , good taxpaying citizens are getting screwed every time they pay their property taxes.

  • Leesh

    How about looking into all the money and city contracts given to Ronnie Burns, Chairman of the mayor’s New Orleans East Hospital Board, yet he and his partners have defaulted on the loan for the Grand Theater in New Orleans East and the taxpayers are now footing the bill for that defaulted loan. Then, Ronnie and has partners, defaults on this loan but receive MILLIONS of $$$$….more taxpayers dollars to revamp the Canal Place Movie Theater and build a new 14 screen theater in Kenner at The Esplanade Mall! I thought it was against city ordinances / laws to owe the city monies and still receive city contracts? Ronnie has the contract for the Armstrong Airport Parking AND he and his brother supposedly, have the contracts for all the concessions at the airport. How can that be?!!!!!

  • creole 65

    It is what it is because people like you who seems to have the know do nothing about these things. Who do we go to when we have people in the Federal Attorney’s office acting like children rather than doing their job. Ronnie has been around a long time, he knows City Hall coming and going . Doesn’t his wife have some kind of inside job? Its always the same people who get this money. Go back thirty years and look at who belonged to COUP and you will see who is in the background of a lot of the power in this City. Maybe not as much as before, but they are still around.

  • Tim

    Give the mayor’s office credit for finally cracking the whip on this shyster developer, but shame on him too for handing over taxpayer money with so little oversight. I used to live walking distance from this site and as others have commented, there’s no reason a serious investor couldn’t have already turned this vacant property to productive use. Except if government is willing to hand out “money for nothing.” That’s what appears to have happened here.

    But this just begs the question where else and who else? You have to conclude this same sorry situation is going on all over the city.