Ahead of major tourism industry merger, council members worry about accountability and public input in the city’s tourism future
By Michael Isaac Stein
Source: The Lens
November 15, 2019
On Friday, The New Orleans Tourism Marketing Corporation, a public municipal entity, provided some of the first details into what it will look like once the majority of its staff, mission and funding are absorbed by the private nonprofit New Orleans & Company, formerly known as the Convention and Visitors Bureau.
The merger will formally take place on Jan. 1, as part of the “fair share” deal that Mayor LaToya Cantrell negotiated with the state legislature this year. The aim of the deal was to route more tourism dollars to the city for infrastructure projects.
The merger will transfer $8 million in annual funding and all but one or two of NOTMC’s employees to New Orleans & Company, NOTMC CEO Mark Romig told the New Orleans City Council at a Friday meeting. In Romig’s proposed 2020 budget, $1.8 million would remain with NOTMC for some lingering responsibilities, while $3.9 million would go to the city for infrastructure funding.
But some council members expressed concerns about accountability for the public dollars and other remaining uncertainties with the merger.
Councilwoman Kristin Palmer, who sits on the board of NOTMC along with council members Jay Banks, Helena Moreno, and Jason Williams, complained earlier in the week that she had yet to see a written plan for the merger.
“There are three other council members who sit on NOTMC and we have repeatedly requested information on any type of transition in writing, which we have yet to receive,” she said at a Monday meeting. “And meanwhile, [New Orleans and Company] is like absorbing and hiring all the NOTMC employees and we don’t know what’s going on.”
On Friday, Palmer got a chance to expand on her concerns.
“What has transpired at NOTMC is really remarkable, in terms of listening to the community, in terms of marketing more events that are multicultural,” Palmer said. “My concern is that is because of the board structure of the NOTMC and our public meetings. The board of NOTMC is diverse by nature.”
NOTMC’s board of directors is largely appointed by the mayor and has reserved seats for sitting council members. It usually has six public meetings every year, Romig said.
New Orleans & Company has a bit more accountability than a purely private organization because it receives public funding — $21 million in 2019, according to the Bureau of Governmental Research. That would grow to $29 million with this merger, and could go even higher if voters approve a new tax on short-term rentals on Saturday, 25 percent of which would be routed to New Orleans & Company.
Because of the public funding, New Orleans & Company has to submit financial information to the state legislative auditor every year. But its board is internally appointed and has no public meetings.
Both the NOTMC and New Orleans & Company have a mission of marketing the city for tourism. And according to Palmer, NOTMC has been vital in keeping the public’s voice in deciding how the city’s tourism industry will evolve.
“I also think what’s really important is public input into how we want our city to be marketed,” Palmer said. “How we’re going to achieve that with this new model hasn’t really been discussed.”
Palmer said that the city needs a “sustainable tourism plan,” and that she’d like to see NOTMC lead that process. Palmer has often talked about the problem of “over-tourism” in New Orleans.
“It’s been very positive for our economy,” she said. “But there’s also some not so positive impacts on our community.”
Palmer has been leading the push for creating stricter short term rental regulations, especially in residential neighborhoods, for more than a year. Councilman Jay Banks also discussed how the tourism industry needs to be designed intentionally to make sure its fruits are spread around the city.
“My concern is that our culture bearers aren’t included,” Banks said.
A push to merge the two groups in 2010 floundered over many of the same issues. Then-Mayor Mitch Landrieu objected because he wanted the organization that resulted from the merger to be a public body, not a private one like New Orleans & Company, according to the Times-Picayune. The NOTMC board ultimately voted against the merger in 2010.
New Orleans Tourism Marketing Corporation has had three main funding sources for years. The first is a portion of a 1.75 percent hotel tax. The revenues from the tax go through New Orleans & Company, which then gives .75 percent of the tax to NOTMC. That is expected to bring in $7.8 million this year, according to an analysis by the Bureau of Governmental Research. After the merger, that money will stay with New Orleans & Company.
The second major source is annual funding from the New Orleans Regional Transit Authority stemming from a lawsuit settlement in 2000. The agreement was expected to send $5.5 million from the RTA to the NOTMC and the New Orleans convention center this year, according to the Bureau of Governmental Research. But in February, the RTA stopped honoring that agreement and decided to keep the money for public transit.
As The Lens previously reported, the boards of the NOTMC, convention center and RTA have been consistently convening executive sessions to discuss potential litigation regarding the disputed funding. It’s unclear whether a legal challenge will materialize, but for now, the money will stay with the RTA.
The group’s third major source of funding is a nightly fee ranging from 50 cents to $1 on hotel room bookings. That money, which is collected by the city on NOTMC’s behalf, will not go to New Orleans & Company. That nightly fee will generate $5.7 million next year.
According to the draft budget presented by Romig, $1.8 million would remain with NOTMC to fund the remnants of its responsibilities, including $530,000 in cash payments on previously negotiated deals with Essence Festival and the Super Bowl and for port-a-potties during Mardi Gras.
Another $200,000 would go towards salaries and administrative costs for NOTMC and $450,000 would go towards cultural economy support that might not be part of New Orleans & Company’s purview. That includes support for smaller parades and festivals, according to Romig.
The roughly $600,000 remaining would be funneled through NOTMC to three organizations, supporting film, music and multicultural tourism in the city.
That leaves $3.9 million that would revert to the city “for infrastructure or other purposes of the city,” according to Romig’s presentation.
Short-term rental tax could open door for accountability
This isn’t the first time this year that the council has raised concerns about accountability for the public funds going to New Orleans & Company. The issue was also brought up in connection to the proposed 6.75 percent short term rental tax that will go before voters on Saturday.
If approved, the revenues from the tax would be split, with 75 percent going to the city for infrastructure and 25 percent going to New Olreans and Company.
In July, the council voted to put the tax on the November ballot. But before it did, council members raised similar concerns about accountability and public input.
“The accountability and transparency question, the mayor recognizes that’s a concern for the council,” Cantrell’s Chief of Staff John Porciau said at the July meeting. “It’s a concern for her.”
If the ballot measure is approved on Saturday, it wouldn’t institute the tax right away. It would simply give the council the ability to levy a 6.75 percent tax. The council would have to vote again to actually put it into effect. It would also have to approve a cooperative endeavor agreement that would funnel the 25 percent from the city to New Orleans & Company.
“That is where we have our say regarding the transparency piece,” said Councilwoman Helena Moreno. “It’s on the CEA for that 25 percent that we’re going to have some control in making sure those tax dollars are used properly.”
She also said that the council has the option to refuse to approve the agreement until they find it to be acceptable. Until then, she said, the money would go into an escrow account that’s out of reach of New Orleans & Company.
The CEA negotiations could also give the council some leverage to create more accountability for the new funds being rerouted from the NOTMC.
“Those dollars will have to be accounted for and you’ll have to have a reporting out on how those dollars are being used,” Romig told The Lens after Friday’s meeting, referring to the short-term rental tax.
What that accountability will look like, however, isn’t yet clear.
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