In The News › City Council defers decision on special tax district for former Lake Forest Plaza mall

City Council defers decision on special tax district for former Lake Forest Plaza mall

Friday, Septemeber 18, 2009
By Bruce Eggler
The Times-Picayune

Over the objections of developer Cesar Burgos, the City Council deferred action Thursday on a tax break that Burgos has said he needs to redevelop the mostly vacant site of the former Lake Forest Plaza mall in eastern New Orleans.

Burgos and co-developer Ashton Ryan have outlined plans for a $220 million development — to be named the New Orleans East Marketplace — that would include a Wal-Mart, several other stores, restaurants, a gas station, a movie theater, a parking garage and eventually an office tower, hotel and conference center.

Although district Councilwoman Cynthia Willard-Lewis repeated her strong support for the tax increment financing, or TIF, proposal that would let the developers keep nearly half of the sales tax revenue from the businesses at the site, she asked the council to postpone acting on the plan until Oct. 1.

Willard-Lewis said the city’s proposed agreement with the developers needs to be made “tighter” to ensure that the city gets all the “deliverables” it deserves. A flurry of meetings in recent days revealed areas where amendments are needed, she said.

It was unclear whether she thought the amendments were necessary to win council approval of the plan.

Repeating developers’ familiar warning that “time kills deals, “ Burgos urged the council to act quickly. He said investors have made a $100 million commitment to his project but could withdraw it if there is more delay.

“We are a great American city that doesn’t have a mall, “ Burgos said. “Let’s build one.”

Besides Willard-Lewis, at least three other council members have expressed support for the basic idea of the Lake Forest Plaza TIF, though not necessarily for all details of the plan.

Despite postponing action on the Plaza TIF, the council voted to endorse an executive order outlining the city’s overall policy on use of TIFs that Mayor Ray Nagin announced in July. A resolution endorsing the policy was approved 5-1, with Councilwoman Shelley Midura opposed and Stacy Head absent.

The basic idea of a TIF is that the city agrees to give up much of its tax revenue for several years from an area that currently is producing little or no revenue. Instead, the tax money goes into a fund to help pay for infrastructure or other improvements that will stimulate economic development at the site.

In the case of the proposed Plaza TIF, the city — and, it is hoped, the state — would each give up 2 cents of their sales tax revenue for 20 years from all stores and other businesses at the site, with the money being used instead to help finance construction of the Marketplace.

Overall, the city and state would each contribute $60 million through their tax revenue, and the developers would furnish the rest through a mix of cash, the value of the land and commercial loans.

Nagin’s July order said the city would approve TIFs only for areas that are dormant or blighted and in which revitalization would not occur within the foreseeable future without approval of the tax break.

It said TIF districts, which require approval by the council, can involve either sales or property taxes and can be designed to stimulate either commercial or residential development. It said they can be used to finance public improvements, enhance infrastructure or “support investment needs that demonstrate clear public benefit.”

The resolution the council adopted Thursday says the council “will endeavor to support city-initiated TIF districts and will take all necessary steps to approve tax increment financing” in areas that meet Nagin’s basic criteria.

Council President Arnie Fielkow, who has prodded the administration for years to develop a comprehensive policy on TIFs, said Nagin’s order put the city “light years ahead of where we were two years ago.”

Midura, however, said she did not want to “rubber stamp” Nagin’s order, which she said would remain in effect whether or not the council endorsed it. She objected to the procedures Nagin has put in place to monitor the performance of TIF districts. She also said the order would allow only the administration, not the council, to initiate TIF proposals.

The Bureau of Governmental Research has criticized both Nagin’s executive order, saying it contains too many loopholes and allows too much discretion, and the proposed Plaza TIF, which it has said would give up public money to help the developers pay off private debts and would not obligate the developers to follow through on the ambitious plans they have outlined.

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Bruce Eggler can be reached at or 504.826.3320.

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