In The News › Zurik: From City Hall down, convention center money leaves NOLA residents frustrated

Zurik: From City Hall down, convention center money leaves NOLA residents frustrated

FOX 8 WVUE New Orleans News, Weather, Sports, Social

By Lee Zurik, Chief Investigative Reporter

Contributor: Tom Wright, Investigative Producer

FOX 8

November 14, 2016

NEW ORLEANS (WVUE) – “Kind of country back here,” Rosalind Peychaud jokes as we enter her backyard.

But don’t let this longtime New Orleanian fool you: Her country living turns to the urban realities of New Orleans, every time she leaves her backyard.

We ask here how the streets are in her neighborhood. Her simple, understated response: “They need improvement.”

The signs that line her fence help tell her story. She’s been active behind the scenes in politics for decades.

“I know how government kind of works,” she tells us. “And I know how it doesn’t work sometimes.”

So when Peychaud read through a report put together by the Bureau of Governmental Research, or BGR, she says she was fascinated; the numbers didn’t make sense.

BGR raised “The $1 Billion Question” in its so-titled report on whether tax dedications in New Orleans make sense. The report showed tens of millions of tax dollars generated in New Orleans by the tourism industry, but none of it going to fix streets or pay for police.

“It’s misplaced,” Peychaud says. “It makes me think, why can’t we have some of that money come into the city of New Orleans to take care of our unmet needs?”

The BGR showed the Morial Convention Center has a $220 million surplus. Last year they had a budget surplus of $25 million – money they never spent.

The convention center gets two main streams of tax revenue: hotel motel taxes and a citywide food and beverage tax. Every time you eat at a local restaurant or drink at a bar in New Orleans, a portion of that money goes to MCC – about $11 million a year in tax revenue.

“Why are you sucking out $12 million a year that could be going to the city for police protection,” asks Mayor Mitch Landrieu, “to just put it in an account at the convention center and just build it up to a $200 million surplus. That, to me, doesn’t make a whole lot of sense.”

Landrieu spent almost eight years as lieutenant governor, essentially the top tourism job in the state. He doesn’t think peeling some of this money away from the tourism industry would have a negative impact.

“I commissioned a study that said, what does the tourism industry need to do to be healthy and strong,” Landrieu says. “And the first dissatisfier, the thing that stopped people from coming here, was public safety, and the streets. And so, if you were going to invest in things that make the hospitality industry grow, you would make the city safe.”

“This is a hard conversation to have because we all know the importance of tourism in New Orleans, says Amy Glovinsky, who leads BGR.

In its report, BGR concluded the current tax structure evolved over the last 50 years with little planning and accountability.

“A process needs to be undertaken to evaluate what’s available, relative to the needs,” Glovinsky tells us. “In all likelihood, that process would yield a conclusion that some of the use of tax revenue right now do not match the need, and perhaps would be better spent by the city on critical items.”

Any change to tax dedications must be made in Baton Rouge, by the state legislature.

“What we have to be careful to do is not direct funds away from something that’s generating great revenue and other aspects for the city in the form of sales tax, in the form of hotel-motel tax that they do get,” says Rep. Walt Leger, D-New Orleans, one of the state house’s top leaders.

Leger says he’s concerned moving money out of the convention center would put it at a competitive disadvantage. “One thing that we need to not do is make ourselves less competitive, when cities around the country have seen what we’ve been able to accomplish,” he says. “So they are continuing to invest more money in their convention centers, expanding the capacity that they have, developing alternative meeting spaces that meet the needs of smaller conventions that may be of higher value.

Both Leger and Rep. Helena Moreno (D-New Orleans) say, instead of redirecting funds, another solution may be AirBNB’s. If those short-term rentals become legal, Moreno says they’ll be forced to charge hotel-motel taxes, which could bring in tens of millions of additional tax dollars every year.

“Once those become legalized in the city of New Orleans, and it looks like it’s on the path to making that happen, there’s going to be thousands more rooms within the City of New Orleans that will be subject to these taxes,” Moreno says. “That may be the opportunity for the city to capture significantly more dollars, if we separate those out, that the city gets the majority of those dollars.”

Representative Moreno says what’s most important is that all of this money stays in New Orleans, and doesn’t get siphoned off during tough budget times to other parts of the state.

When MCC started planning a Phase IV expansion in the 90s, one cent of hotel-motel tax was re-directed from the city to the convention center. MCC shelved the expansion, but continues to receive that one-cent tax, bringing in about $12 million a year.

“The first thing that we, the city, ought to be able to do is keep the penny that was designated as ours, that we let them have in order to prepare to build the fourth phase,” Mayor Landrieu says. “That penny easily should just come back to the city, because that’s what it was originally intended to do.”

Rosalind Peychaud intends to keep asking the tourism industry to help out a little more. She says it’s time to redirect money, so that the path to her country living is a smoother ride.

“I don’t want to pay anymore,” she says. “I want to pay my share and I want everybody else to pay their share. And if you’re sitting there with $200 million in surplus that you have garnered from people coming to visit my city, help us out.”

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