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Council approves Lake Forest proposal

Willard-Lewis casts lone vote against it

Friday, October 02, 2009
By Bruce Eggler, Staff writer
The Times-Picayune

After more than two hours of debate that divided longtime allies and created some of the strangest political bedfellows in memory, the New Orleans City Council voted 6-1 Thursday to authorize millions of dollars in tax breaks for a team of businessmen hoping to redevelop the mostly empty site of the former Lake Forest Plaza mall in eastern New Orleans.

The lone vote against the tax increment financing, or TIF, plan was cast by Councilwoman Cynthia Willard-Lewis, whose district includes the Plaza site and who, in her own words, normally is ready to “fight like a hellion” for any proposal promising economic development in her district.

In this case, Willard-Lewis — joined by other critics of the proposal ranging from the good-government watchdog Bureau of Governmental Research to former state Rep. Sherman Copelin, usually one of good-government groups’ least favorite politicians — said the plan presented by developers Cesar Burgos and Ashton Ryan was “financially unsound” and “a bad deal.”

She said the ordinance before the council, even though it bore her name as lead author, was “terribly flawed and problematic.”

Leading the opposition to the position taken by Willard-Lewis, Copelin and many other — though by no means all — eastern New Orleans business and residential leaders was another unlikely coalition comprising Mayor Ray Nagin’s administration and its three sharpest critics on the council: Arnie Fielkow, Stacy Head and Shelley Midura.

The issue even split Willard-Lewis and Cynthia Hedge-Morrell, whose positions normally are virtually identical, no matter what issue is before the council. Hedge-Morrell described voting against her friend as “a very awkward position” and “one of the most difficult votes” she will ever cast.

Burgos and Ryan have outlined plans for a $217 million development — at the moment named the New Orleans East Marketplace, though Burgos said that could change — that would include a Wal-Mart, several other stores, restaurants, a gas station, a movie theater, a community market, a parking garage and eventually an office tower, hotel and conference center.

—- City, state relinquish taxes —-

Under the proposed TIF arrangement, designed to promote economic development in an area that currently produces little tax money, the city and the state each would give up 2 cents of their sales tax revenue for as long as 30 years from the stores and other businesses to be built at the site, with the money being used instead to pay off bonds that would finance construction of the Marketplace.

Overall, Burgos said, the city and state would each contribute $60 million through the TIF, and the developers would furnish $97 million, including $17 million in cash and a $75 million mortgage, plus the land, which he valued at $20 million.

He said the TIF “is the only way we can redevelop the mall,” which he said in turn would allow the city to recapture millions of dollars in sales tax revenue it is losing to other parishes because of the shortage of stores in Orleans Parish since Hurricane Katrina.

An economic study done for the developers by economist Loren Scott said that even with the loss of tax revenue caused by the TIF, the project can produce $144 million in net sales tax revenue and $83 million in property tax revenue through 2030, while producing 2,800 permanent jobs.

Burgos said the project offers “absolutely no financial risk to the city” because the city will not be asked to put up any money or guarantee any debt.

Despite Burgos’ plea “to believe with us,” Willard-Lewis said she had intended to withdraw the ordinance she introduced several weeks ago and work to craft a better one.

—- Raft of amendments —-

However, in what Willard-Lewis called “an unprecedented act,” Fielkow, Head and Midura — later joined by Jackie Clarkson — added their names to the ordinance, meaning Willard-Lewis could not withdraw it without their consent, and then introduced three pages of amendments Willard-Lewis said she did not see until Thursday morning.

The amendments, among other things, provide that the city’s 2-cent TIF will not kick in unless the state agrees to match it; limit the project’s “soft costs,” including the developers’ fees, to 15 percent of its total cost, and provide that the fees cannot all be paid until the project is completed; say none of the TIF money can be used to pay the developers’ existing debts; require a “timeline for estimated completions” of each phase of the project; and require that the completed mall contain two “big box” retail stores.

Willard-Lewis said the amendments took care of some of her concerns but left others unaddressed. “I still have grave concerns,” she said. She said the revised agreement still left too much “wiggle room” for the developers and provided no guarantee that the project would ever be completed as promised. “We are not assured anything but a vision,” she said.

On the other side, Head said the proposed agreement was not perfect but was “a very good one.” Saying that she was wearing shoes bought in Jefferson Parish and a dress bought in Biloxi, Miss., she said the city “cannot afford to wait for perfection” in promoting economic development, especially the building of a new mall.

Fielkow said the amendments tightened the deal and eliminated as much risk as possible to the city. If the developers cannot find quality retailers willing to open stores at the new mall, he said, the TIF will never take effect.

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