In The News › Critics say proposed mall would help owners, not the city

Critics say proposed mall would help owners, not the city

Dennis Woltering / Eyewitness News

NEW ORLEANS – A plan to use taxpayer money to develop a new mall at the site of the old Lake Forest Plaza, while touted as an effort to benefit New Orleans East residents, is actually a plan to benefit the property owners, according to the non-partisan Bureau of Governmental Research.

The plan, scheduled to go to a vote before the New Orleans City Council on Thursday, involves tax increment financing, or TIF, plan. It calls for using two cents of the city sales tax and two cents of the state sales tax to develop a new mall of on the site of Lake Forest Plaza.

The first of three phases of the proposed New Orleans East Marketplace would feature a Wal-Mart and other retail outlets, as well as restaurants, a gas station and police substation.

“I think that is probably going to be the best approach and the best way that we can get that mall redeveloped and this whole area regenerated,” said state Sen. Ann Duplessis, a Democrat who represents the area.

The Bureau of Governmental Research calls the project “outrageous.”

“It is a very poor deal for the public and basically a misuse of public funds,” said Janet Howard, BGR president.

Both Lake Forest Plaza L.L.C. and The Grand of the East L.L.C. movie theater defaulted on millions of dollars of loans to the city. Mayor Ray Nagin signed an agreement with banker Ashton Ryan, the owner of Lake Forest, which forgives part of the debt and allows the rest to be paid back if a tax increment financing district is created to help pay for a development there.

“So, in other words, we get repaid if the government commits millions and millions of more dollars,” Howard said.

About $12 million of the TIF proceeds, essentially taxpayer money, would be used to settle private debt. Those debts include money the Grand of the East allegedly owes to Lake Forest Plaza L.L.C. and money that Lake Forest owes to Lowes Home Centers.

Lowes holds the mortgage on the Lake Forest property that is now owned by Ryan and attorney Cesar Burgos, a prominent supporter of the mayor.

“And I certainly don’t think it’s a proper use of TIF proceeds to pay off a property owner’s mortgage,” Howard said.

Duplessis agreed, saying she does not “necessarily” support the idea of using taxpayer money to pay off private debt in a TIF. But she says in this case the mortgage has to be paid so the property can be developed.

“You can’t lend money against an asset that has debt on it,” she said.

BGR also says it is improper for a TIF to take money from an existing stream of revenue as this one would, by stripping taxes that the Lowes store is already generating.

Duplessis disagrees and said Lowes is struggling.

“If we don’t do something to generate this area, to bring more business to the Lowes, we won’t have any tax revenues in the next five to 10 years coming from that Lowes because they will leave,” she said.

BGR also raises the prospect of potential conflict of interest. Duplessis would be a member of the TIF board and is also an executive at Liberty Bank, whose president, Alden McDonald, is a member of the Grand movie theater development group.

“Part of Grand’s debt is being paid with TIF proceeds,” Howard said.

Duplessis counters that McDonald’s ownership has been minimized. She also thinks there is no conflict of interest because she would be one of nine board members deciding any given issue.

Burgos and Ryan did not return calls for comment.

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