Mayor Mitch Landrieu and legislative allies are making a last-minute effort to let the city keep all taxes on property at or near the New Orleans riverfront that hasn’t yet been developed.
Legislators said the proposal would include the deserted World Trade Center and under-developed property such as the parking lot next to the Piazza d’ Italia, which could accommodate a hotel.
Creating the taxing authority is so controversial that it has gotten no public hearing by lawmakers. Nonetheless, legislators are trying to attach the proposal to another bill and pass it before adjournment at 6 p.m. Monday.
“A lot of people, unfortunately, haven’t been apprised of the details, which could be problematic,” state Sen. Karen Carter Peterson, D-New Orleans, said in an interview Sunday.
The Lens first reported on the mayor’s plans five weeks ago, but it has gotten practically no attention since, and it was never heard in a legislative committee, typically the first step for legislation.
“The city is suffering from financial troubles,” state Sen. J.P. Morrell, D-New Orleans, said, in defending the effort to pass a proposal that hasn’t been aired publicly. “You deal with the hand you’re dealt with.”
He declined to show a reporter the latest version of the plan under discussion, but he said the district would have a nine-member board featuring the mayor, his chief administrative officer and the city council.
In general terms, the plan calls for allowing the city to keep all of the sales tax and hotel/motel taxes generated from new developments within a special economic development district. The state and other public entities – such as the RTA and the Orleans Parish School Board — would not get the shares they normally receive.
Those taxes would help Landrieu and the City Council pay for three court-ordered judgments: to cover a pension deficit and federal consent decrees aimed at fixing problems within the parish prison and at the police department. Deputy Mayor Andy Kopplin has said those court-ordered judgments could cost the city up to $40 million a year. Landrieu is hoping voters will approve a doubling of property taxes dedicated to fire and police services through a process that the Legislature authorized on Thursday.
Still under discussion is whether to let the special economic district charge higher sales, property and hotel taxes on the projects when they are developed, said state Rep. Walt Leger, D-New Orleans, who will play a central role in whether the idea lives or dies Monday.
Morrell, who will also play a key role, said on Sunday that the possibility of the economic development district charging higher taxes could be a deal-breaker.
“I’m very concerned about putting any taxing district over a business without a business having a say,” Morrell said.
Tourism industry officials backed the proposal in April as an alternative to a Landrieu plan that would have raised hotel taxes; that plan failed. The beauty of the tax district, tourism industry officials reasoned, is that it contains the more politically palatable aspect of taking tax revenue away from entities that are not yet getting the money — because the developments have yet to be undertaken.
Here’s how the proposal would work: Once the World Trade Center is developed, the state, the RTA, the Orleans Parish School Board, the Louisiana Superdome, the Ernest N. Morial Convention Center and the New Orleans Tourism and Marketing Corp. would not receive the sales and hotel/motel taxes they normally get. The city would keep all of the money.
The public entities would forgo the tax revenue only if they entered into a Cooperative Endeavor Agreement with the city, Landrieu spokesman Tyler Gamble said in an email Sunday night.
City officials are seeking bids for the World Trade Center after abruptly ending lease negotiations with Gatehouse Capital a month ago – a decision that surprised Gatehouse officials, who then complained that city officials made little effort to strike a deal with them before ending negotiations.
City officials in August had selected Gatehouse, which proposed to spend $190 million to turn the World Trade Center into a W hotel topped by luxury apartments, under a 99-year lease. But the two sides had to agree on the financial terms for it to advance.
Kopplin said no link existed between the city’s efforts to create the riverfront taxing district and the decision to end the negotiations with Gatehouse.
Senate Bill 368 appears to be the vehicle for creating the district. On Sunday, Morrell asked his Senate colleagues to reject the House-approved version of the bill, which would create a regional business park in New Orleans. The Senate rejection threw the bill into a conference committee, where three members apiece from the Senate and House will try to hammer out acceptable language for the district and attach it to SB 368.
Both the House and Senate would have to approve the new version to send it to Gov. Bobby Jindal.
This story was amended after publication to include a comment from Tyler Gamble with further details about how the arrangement would work. (June 2, 2014)