In The News › Orleans Parish voters to decide Nov. 6 on renewing, increasing millage for Orleans Levee District

Orleans Parish voters to decide Nov. 6 on renewing, increasing millage for Orleans Levee District

By Bruce Eggler
The Times-Picayune

Voters will decide Nov. 6 whether to authorize the Southeast Louisiana Flood Protection Authority-East to levy for 30 years a tax of 6.07 mills on property in the Orleans Levee District, which comprises the east bank of Orleans Parish.

Approval would result in the renewal of an existing tax of 5.46 mills, and a millage increase of 0.61 mills. Voters will decide on the two millages together, not in separate votes.

The millage increase would return the tax to a level voters approved in 1983.

If the proposition passes, 5.46 mills, or about $13.9 million a year, would be dedicated to levee construction and maintenance, flood protection, hurricane flood protection and related purposes, including debt service payments, in the Orleans Levee District.

The remaining 0.61 mills, or about $1.5 million a year, would be dedicated to the operation and maintenance of the district’s “non-flood assets” that do not produce revenue, including Lakeshore Drive and adjacent parkland. If some of the proceeds are not needed for that purpose, they would be used for flood control.

Before Hurricane Katrina, the Orleans Levee District was managed by the Orleans Levee Board. Its central mission was supposed to be flood control, but beginning in the 1930s it began to amass an array of unrelated assets, including an airport, two marinas, various commercial properties, Lakeshore Drive and adjacent parklands. It also leased dock space for a riverboat casino.

Although some of the assets generated revenue for flood protection, critics said that managing the many ventures was a distraction from the levee board’s core responsibilities.

In the wake of Katrina, state voters approved a constitutional amendment allowing the Legislature to replace the various local levee boards in the New Orleans area with two regional flood protection authorities separated by the Mississippi River. The Flood Protection Authority-East now is responsible for flood protection on the east banks of Jefferson and Orleans parishes as well as in St. Bernard, St. Tammany and Tangipahoa parishes.

While the levee districts in those areas continued to exist, their boards were replaced by the Flood Protection Authority’s board. At the same time, control of the Orleans Levee District’s extensive non-flood assets was transferred first to the state’s Division of Administration and then to the new Non-Flood Protection Asset Management Authority. But all of the property tax revenue stayed with the Orleans Levee District, to be overseen by the Flood Protection Authority.

The Orleans Levee District currently levies three taxes totaling 11.67 mills. It collects 5.46 mills from a constitutionally authorized general tax, 0.75 mills from a maintenance tax and 5.46 from a Special Levee Improvement Project tax. The SLIP tax, which is set to expire in 2015, is the subject of the proposed renewal.

Together, the taxes total about $29.4 million. Of that amount, the levee district plans to spend $16.3 million in the 2012-13 fiscal year, leaving a projected $13.1 million surplus. This will further bolster the district’s reserves, which total about $73 million.

However, the district is facing major new expenses. As early as 2013, the Flood Protection Authority must begin paying an estimated $10 million a year for 30 years to cover its share of the cost of flood-protection improvements that the Army Corps of Engineers is making across the New Orleans area. It will have to pay another $4 million a year to operate and maintain the new infrastructure, including the Lake Borgne Surge Barrier and the Seabrook floodgate on the Industrial Canal.

Millage proponents say extending the 5.46-mill SLIP tax is critical for the levee district to cover these new flood-protection costs. Although the proposed 30-year extension is longer than most millage extensions, they point out that it equals the payment period for the matching funds.

The non-flood-protection share of the millage would be dedicated to maintaining Lakeshore Drive; 202 acres of parks along Lakeshore Drive and lakefront levees; 55 acres of parks and greenways within the Lakeshore, Lake Vista, Lake Terrace and Lake Oaks subdivisions; and the New Basin Canal Park between Pontchartrain and West End boulevards. At the lakefront, the parkland includes a public boat launch, a fishing pier, four playgrounds, four picnic shelters,15 picnic pavilions, the Mardi Gras Fountain and two other fountains.

The land occupied by the four lakefront subdivisions was created beginning in the 1930s when the levee district built the Lake Pontchartrain seawall and filled in the area on the land side with lake sediment. When it sold the new land for residential developments, the levee district promised to maintain the green spaces in perpetuity.

The Non-Flood Asset Authority’s 2012-13 budget projects expenses of $6.9 million, but it anticipates receiving only $5.2 million from its revenue-generating assets, including the Lakefront Airport, Orleans Marina, South Shore Harbor, Lake Vista Community Center and about a dozen commercial lots. It also will receive $700,000 from the Flood Protection Authority, but that leaves a $1 million operating deficit.

To make up for annual revenue shortfalls, the Non-Flood Asset Authority has been drawing from a $7.4 million settlement with the Belle of Orleans riverboat casino, which broke its lease at South Shore Harbor after Katrina. But that settlement fund has only $1 million left, meaning it will be exhausted next year.

It costs the authority about $2 million a year to maintain assets that produce no revenue, including Lakeshore Drive and its parkland. After exhausting the payments from the Flood Protection Authority and the riverboat settlement, the authority says it will not have enough revenue to maintain these assets. Therefore, it says, it needs a new revenue source.

Proponents say the millage dedicated to non-flood assets would cover most of the costs of maintaining Lakeshore Drive and the parkland, and would let the Orleans Levee District meet its legal obligations to the subdivisions. They also say the proposed tax would not take any money from the Flood Protection Authority.

However, the Bureau of Governmental Research questions the wisdom of the proposed millages. “It is not clear that the current approach to the non-flood assets is optimal,” it said in its analysis of the millage requsts. It said the Non-Flood Asset Authority has the authority to dispose of some of its various assets, which have little in common except their location. Some, such as the airport and the marinas, are similar to assets managed by other government entities, BGR noted.

Keeping some of the authority’s revenue-generating assets could make sense if they were producing revenue for flood protection, BGR said. However, it said, “this is clearly not the case.” The revenue-producing assets not only fail to subsidize flood protection, it said, they do not even yield enough money to maintain Lakeshore Drive and the adjacent parklands.

Instead of enacting millages that could “cement the current management structure for another 30 years,” BGR said, other alternatives deserve consideration.

One would be completely disposing of the Orleans Levee District’s non-flood assets or transferring their management to other entities. For instance, BGR said, the New Orleans Aviation Board could take over control of Lakefront Airport, the city’s Municipal Yacht Harbor Management Corp. could oversee the marinas, and City Park or the city’s Department of Parks and Parkways could manage the lakefront parklands.

BGR admitted there is a risk that if the millage fails, the state could direct the Flood Protection Authority once again to subsidize the non-flood assets, reducing the money available for flood control. However, it said, “there is sufficient time before the existing millage expires to come up with a better solution.”

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