In The News › Effort to propel tax district revived

Feb 29, 2008

Source: Times-Picayune

Effort to propel tax district revived

Effort to propel tax district revived
Lake Forest companies continue to owe city
Friday, February 29, 2008
By Leslie Williams
Staff writer

Efforts are under way again to activate a special financing district that would pour sales tax money into a project that would benefit two prominent New Orleans bankers and others associated with limited liability companies millions of dollars in arrears on two government loans.

Tanzie Jones, a spokeswoman for state Sen. Ann Duplessis, D-New Orleans, distributed an e-mail announcing that an “organizational meeting of the Lake Forest Plaza district” is scheduled March 4 at the First NBC building, 210 Baronne St.

Assembly of a governing board is necessary to activate the special financing district.

At least one watchdog group opposes the meeting.

“It is patently absurd to even consider a TIF (tax increment financing) district for a development when one or more of the principals is in arrears on obligations to the city,” said Janet R. Howard, president of the Bureau of Governmental Research, which has been monitoring the activities of organizers.

Ashton Ryan, president and CEO of First NBC, is a member of the Lake Forest Plaza LLC, which owns most of the shopping center property at Read Boulevard and Interstate 10. In December 2007 — after the city wrangled with Ryan and Plaza developer Gowri Kailas for years over a loan for economic development connected with the former Sears building at the mall — Civil Court Judge Ethel Julien ordered Kailas and that limited liability company to pay the city $1.5 million as well as a late payment fee of $126,544, reasonable attorneys’ fees and all costs “incurred in the collection of that certain promissory note dated Dec. 31, 2001.”

The city obtained money for the Sears loan via an Urban Development Action Grant designed to help stimulate economic development. Mayor Ray Nagin informed Ryan and Kailas in the spring of 2004 that the Sears loan matured Dec. 31, 2003, and was in default.

Alden McDonald — the CEO of Liberty Bank & Trust, where Duplessis works — is a member of the Grand Theater LLC, which is in arrears for nearly $2 million in connection with a cinema loan.

According to federal documents, the $5 million loan to build the theater was funneled through the federal “108” program and $1 million from grant money the city received for stimulating economic activity. In October, Edward Blakely, the city’s recovery czar, wrote a letter to Kailas and Ryan informing them that the Grand Theater LLC is in arrears by nearly $2 million in regard to the cinema loan.

Campaign donations

Nagin urged the companies to pay up.

Neither limited liability company has made any payments, however, to the city since the past-due accounts were disclosed in a Times-Picayune article Jan. 31, the same day Duplessis and others scheduled the first meeting to assemble a governing board for the TIF district. Duplessis canceled that meeting at the 11th hour because it was not properly advertised, she said.

The companies have given money to the political campaigns of people who will serve on the board if it is assembled March 4.

The Lake Forest Plaza LLC contributed $1,000 to the 2007 campaign of Duplessis, and Liberty Bank put up $2,000, according to records.

Lake Forest Plaza LLC contributed $1,000 in October 2007 to the campaign of state Rep. Austin Badon Jr., D-New Orleans, and Liberty Bank contributed $500 in 2005.

Lake Forest Plaza LLC gave $1,000 to the campaign of City Councilwoman Cynthia Willard-Lewis in 2007, and Liberty Bank & Trust contributed $2,000, according to records

In addition to Duplessis, Badon and Willard-Lewis, other members of the planned seven-member board would include City Council President Arnie Fielkow, the “owner of the Lake Forest Plaza Shopping Center or his designated representative,” Nagin or his designee, and Stephen Moret, state secretary for the Department of Economic Development. Legislation authored by former state Sen. Jon Johnson and others that created the TIF district in 2003 outlines the board’s composition.

‘A balanced approach’

Activation of the district would allow the city to capture new sales tax revenue generated in the district and reinvest it in a town center project, which Kailas — who is a member of both limited liability companies — has described as a high-density mall of mixed uses such as residences, retail stores, restaurants, offices, a cinema and a hotel.

Johnson said the intent of the legislation was to capture state and city sales taxes to help finance development of the shopping center site, which includes the cinema.

If assembled, the board will have the latitude to determine how the money will be spent in conjunction with rules, regulations and a comprehensive plan, Johnson said.

Johnson said he included a prominent administrative position from state government on the board to ensure “a balanced approach.”

In an e-mail, Moret, the state secretary for the Department of Economic Development, informed Duplessis Wednesday that he could not attend the gathering because he’s scheduled to be out of town for a business meeting. Nagin also does not plan to attend the meeting, said James Ross II, a spokesman for the mayor.

In addition to his involvement in the two companies in arrears, Kailas had a third loan in arrears weeks ago. The 11-story Executive Plaza office building at Read and Lake Forest boulevards was scheduled to be auctioned Jan. 24 because Executive Plaza Inc., a company led by Kailas, was in default on a mortgage. Kailas, who has his headquarters in Metairie, is president of Executive Plaza.

The Lake Forest Plaza LLC recently sold part of the 80-acre Plaza property to Lowe’s, which is building a 140,000-square-foot home improvement store there. Lowe’s paid about $5.6 million for 13.39 acres or 583,270 square feet, adding to the list of entities owning part of the Plaza real estate.

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Leslie Williams can be reached at lwilliams@timespicayune.com or (504) 826-335

Feb 29, 2008

Source: Times-Picayune

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