In The News › BGR pans Morial Convention Center taxing power

BGR pans Morial Convention Center taxing power

By Greg LaRose | The Times-Picayune

May 11, 2016

A bill progressing through the Louisiana Legislature would give taxing power to the board overseeing the Morial Convention Center so that it can finance a $1 billion development upriver from its main meeting space. The watchdog Bureau of Governmental Research is repeating its refrain against approving new taxes in New Orleans without a thorough evaluation of dedications already in place.

A proposal called the Trade District calls for a 1,200 hotel, 1,400 to 2,000 residential units, and 300,000 square feet of retail space, restaurants and entertainment venues. The New Orleans Exhibition Hall Authority doesn’t have a specific tax proposal in the works, but House Bill 1056, which Rep. Walt Leger III has authored, would open the door to collecting a tax within the district.

A report BGR released Wednesday (May 11) is critical of extending more taxing authority to the convention center.

“Because the district has no residents, the district’s board could impose new taxes without voter approval,” the report said. “…There is no sunset provision for the taxes the bill authorizes. The board could make permanent any tax it approves.”

Leger and Convention Center general manager Bob Johnson were not immediately available for reaction to the report.

BGR has routinely been opposed to any tax issued to pay for a project being collected past the period when the debt is paid in full. Its report notes the Convention Center has received new taxes to fund specific expansions dating back to the 1970s. Although those taxes had sunset dates, the authority has used its power to continue collecting them and devote them to other projects or purposes. As a result, the report said, none of its taxes approved since 1978 has sunset.

The Trade District proposal under consideration involves local developers Daryl Berger, Joe Jaeger and the Howard Hughes Corp., which owns the Outlet Collection at Riverwalk downriver from the Morial Convention Center. While they are expected to put the financing together for its substantial commercial development, the Exhibition Hall Authority has promised to cover $155 million in infrastructure costs for the 47-acre development.

The board has also pledged $85 million to reduce Convention Center Boulevard from four to two lanes and change traffic patterns on adjacent streets, with the objective of improving access into and out of the Trade District.

Although the mayor’s office opposes the plan, the BGR report notes the project and the infrastructure work would exceed the convention center’s $222 million in reserves. “If that is not enough, they said they would use the HB 1056 taxing authority.”

BGR was also critical of using tax increment financing to pay for Trade District work, which the bill would permit. The authority has not said it intends to pursue a TIF deal, which typically relies on a sales tax to subsidize private development.

In the report, BGR said it is not taking a stance on the merits of the Trade District or on whether the convention center board should invest public resources in the project. But in repeating a call made in its November 2015 review of New Orleans’ tax structure, “The $1 Billion Question,” the bureau suggests an assessment and prioritization of the city’s various levies is needed.

Tourism, conventions and sports received 14 cents of every dollar collected in property, sales, hotel and other taxes collected in 2015, according to BGR estimates. This includes a 0.25 percent citywide tax on food and beverage sales dedicated to the convention center for an expansion that was never pursued.

BGR has suggested rededicating that food and beverage tax, which allowed to center to build a surplus reaching $200 million, could help the city meet other needs considered to be more pressing.

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