In The News › Tax breaks get scrutiny, pass

May 9, 2007

Source: Times-Picayune

Tax breaks get scrutiny, pass

Tax breaks get scrutiny, pass
Developer to reveal income of projects
Wednesday, May 09, 2007
By Greg Thomas
Real estate writer

Less than a week after the nonprofit Bureau of Governmental Research issued a report criticizing the New Orleans Industrial Development Board for issuing tax rebates too frequently and to projects that are already heavily subsidized, the board on Tuesday granted tax breaks to two low-income apartment projects and a proposed drugstore.

But the board, with Bureau of Governmental Research Executive Director Janet Howard sitting in the audience of its meeting, grilled the developers behind the projects before signing off on the breaks and ultimately required one developer seeking breaks on two different projects to submit to annual reviews of the income of his developments.

Board member Tyrone Wilson, reviewing the applications, said, “Pre-Katrina, we would probably not approve these projects.” But he also expressed awareness of the need for affordable housing in the city.

The projects winning tax break approval Tuesday were:

— A proposed 72-unit mixed-income apartment community planned for the site of the closed Crescent City Motors property on Jefferson Davis Parkway. Developer Matt Schwartz of Domain Development is pursuing the project under the business name 750 Jeff Davis LLC

According to the Bureau of Governmental Research, the 750 Jeff Davis project has already received $12.9 million in low-Income housing tax credits, which covers 91.5 percent of the project’s total cost of $14.1 million.

The development team asked the board to freeze the property’s present annual taxes of $73,738 for 15 years.

Without the property tax abatement awarded Tuesday, Schwartz said, he would not be able to finance the project.

The tax break for the project passed unanimously.

— A 183-unit mixed-income housing complex at 4301 Tulane Ave. on the site of the former Baumer Foods processing plant. Baumer, which produces Crystal Hot Sauce and other condiments, has moved its operation to Reserve. Domain is also the developer behind this project.

Domain is expected to close on the purchase of the Crescent City Motors site and the Baumer Foods plant this week.

The development team asked the Industrial Development Board to freeze the property’s present annual taxes of $21,234 a year for 15 years.

The tax break for the project passed unanimously, but in order to get breaks on both of his projects, Schwartz had to agree to allow annual reviews of his projects’ income. And when his properties are stabilized, his tax break will be reduced and his tax bill raised accordingly.

— The redevelopment of an old grocery store site into a new retail complex at the corner of Claiborne and Carrollton avenues involving a Walgreens Co. drugstore and a Robért Market.

The $4.5 million project, proposed by Carrollton Revitalization LLC, a team led by Darryl Berger, prompted questions from board members skeptical about subsidizing Walgreens, a national chain.

In addition, Metro-Source LLC, a third-party contractor hired to perform cost-benefit analyses on projects going before the board, suggested that within three years the site could probably be developed without subsidies from the city, state or federal government.

But the site has been untouched for nearly a dozen years, and residents and city officials have been clamoring for a new grocery. And Wilson and board Chairman Jimmie Thorns said it’s critical to kick-start rebuilding by offering incentives.

Carrollton Revitalization asked the board to freeze the property’s annual taxes of $15,110 a year for nine years.

The tax break for the project passed 4-3 with one member abstaining.

Meanwhile, yet another proposal by Domain to buy the Dixie Brewery building on Tulane Avenue and create mixed-income housing in it was pulled from the board’s agenda. That deal is tied up in litigation with the building’s current owner over a $2.3 million tax bill dating back to 1986.

At the conclusion of the meeting, Howard of the Bureau of Governmental Research said that while affordable housing is critical for the city, diminishing the city’s tax base by subsidizing developers that already have substantial subsidies will cause major headaches. Such moves, she said, erode the local tax base to the point that the city is unable to support schools, police and fire protection or the billions in infrastructure improvements the city needs in the wake of the 2005 hurricanes.

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Greg Thomas can be reached at gthomas@timespicayune.com or (504) 826-3399.

May 9, 2007

Source: Times-Picayune

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