There’s a roadblock for LaToya Cantrell’s latest tax revenue-shifting plan: John Alario

By Richard Thompson

Source: The Advocate

October 6, 2018

Louisiana state Senate President John Alario on Friday threw cold water on Mayor LaToya Cantrell’s tentative plan to try to shift tax revenue away from local tourism agencies to help pay for improving New Orleans’ antiquated drainage, water and sewerage systems.

“I would hate to see it diverted for any other reason other than tourism,” Alario, the powerful Westwego lawmaker, said in an interview.

Alario spoke a day after Cantrell said she would ask state lawmakers, presumably during next year’s legislative session, to shift some of the hotel tax revenue from at least four non-city entities, including the one that oversees the Ernest N. Morial Convention Center.

“I’m not saying that we want it all,” Cantrell said of revenue received by the center and three other recipients of the tax proceeds: the New Orleans Tourism Marketing Corp.; the Louisiana Stadium and Exposition District, which oversees the Mercedes-Benz Superdome and other sports facilities; and New Orleans and Co., formerly the Convention and Visitors Bureau.

Alario said he hasn’t discussed the issue with Cantrell but that he is sympathetic to her need to address the city’s pressing infrastructure issues, such as replacing the Sewerage & Water Board’s outdated turbines and pumps, which have been around for close to a century. The overhaul is estimated to cost tens or hundreds of millions of dollars.

“I know she’s got a tough job, and I wish her the best,” he said, adding that other areas across the state, including Baton Rouge and Shreveport, have also faced drainage issues.

Alario’s opposition would likely doom Cantrell’s proposal in the Legislature.

But one area where the mayor and the senator may be in agreement is concern over the large public subsidies being sought by the would-be developers of the Morial Convention Center’s proposed $557.5 million, 1,200-room Omni Hotel.

The nonpartisan Bureau of Governmental Research has said that the subsidies would total as much as $330 million. A firm hired by the Convention Center to provide an analysis of the project has argued that the subsidies would be worth about half of that.

“That seems awfully expensive, but in all fairness, I haven’t gotten too far into that,” Alario said.

In August, Cantrell expressed “grave concerns” about the large public subsidies being sought by the developers.

BGR has also questioned whether it makes sense for the Convention Center to be investing tens of millions of tax dollars in this project when the city has billions of dollars in pressing infrastructure needs, most prominently at the Sewerage & Water Board.

But Alario isn’t the only lawmaker to express skepticism about Cantrell’s plan to redirect some tourism revenue. State Sen. J.P. Morrell, a New Orleans Democrat, said Thursday that getting the rest of the Legislature to go along with it could be “a heavy lift.”

“When you talk about diverting tourism dollars to infrastructure, you have to suspect that the tourism industry statewide will rally to get pushback,” Morrell said.

Alario echoed that sentiment on Friday.

“The jobs are very important to New Orleans and the general area, so I just would be very reluctant, and they would have to be a big selling point here to get me to change my mind on that,” he said.

The latest scrutiny of the Convention Center’s tax revenue comes as it considers moving ahead with the proposed 1,200-room hotel on an 8.1-acre site at the upriver end of the giant exhibition hall.

Convention Center officials have said the incentives outlined in the development group’s proposal are simply a starting point for discussion.

But Alario drew comparisons to Harrah’s Casino’s failed bid early this year to build a new 24-story hotel, which failed to win legislative approval, with Alario playing a key role.

Harrah’s promised to spend $350 million on the project in return for a 30-year extension of the operating license for its casino. Opposition to the development was led by New Orleans businessman Joe Jaeger, who argued that the state should be looking for a better deal at a time when it faces severe financial problems.

Jaeger — the biggest hotel owner in New Orleans — is part of the development team behind the Convention Center project. But Alario raised the same question about that project as the one that ultimately killed the Harrah’s deal, at least for now: “Is it a good return on investment for the taxpayers?”

“Harrah’s, at least, was putting up some money to get it done, and they were going to use their own money to get it built,” he added.

To help cover the proposed hotel’s cost, the developers are seeking a range of public subsidies, including $41 million in cash from the Convention Center, as well as a complete rebate of a 10 percent hotel occupancy tax and a 4 percent sales tax on all hotel revenue from sources other than room rentals until the hotel’s $516.5 million bond debt is repaid — roughly 40 years.

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