BGR Finds ‘Fair Share’ Deal is Improving New Orleans Infrastructure, Can Be Strengthened

By Biz New Orleans Staff

September 6, 2024

NEW ORLEANS — This week, the Bureau of Governmental Research (BGR), a private, nonprofit, independent research organization dedicated to informed public policy making and the effective use of public resources, released a detailed report assessing the impact of the 2019 “Fair Share” agreement. The agreement channels new tourism revenue into vital infrastructure projects in New Orleans. The report confirms that the deal has been successful in generating significant funds for infrastructure improvements with minimal cost to local taxpayers. However, it also highlights several areas where enhancements could further benefit the city’s infrastructure and public transparency.

According to BGR, the Fair Share deal, funded primarily through taxes on hotels and short-term rentals along with additional city contributions, generated $30.8 million in recurring revenue for 2023. Of this total, $27.6 million was allocated to infrastructure projects, with $21.9 million directed to the Sewerage & Water Board (S&WB) and $5.7 million to the City’s Department of Public Works (DPW). The remaining $3.2 million was used for tourism promotion through New Orleans & Company, a private nonprofit organization.

The report highlights that the S&WB has committed $84 million of its Fair Share funding towards essential upgrades, including improvements to electrical power systems, water meters, and water treatment facilities through 2025. Despite this progress, a recent ordinance passed by the New Orleans City Council could potentially restrict future funding to drainage projects, possibly impacting the S&WB’s ability to address other critical infrastructure needs. The ordinance’s author has indicated a plan to amend the legislation to clarify its intent.

Public Works has used its Fair Share revenue to double its annual funding for street maintenance to $15 million. However, this amount still falls significantly short of the estimated $50 million needed for comprehensive street upkeep. BGR’s analysis reveals a lack of public reporting requirements for Fair Share spending by Public Works, which complicates tracking and accountability. Additionally, New Orleans & Company’s reports on short-term rental tax revenues are noted to lack sufficient detail, and the City’s operating budget does not clearly track Fair Share expenditures, necessitating BGR’s independent analysis.

Looking ahead, BGR suggests that the current 75%-25% revenue split between the S&WB and Public Works may need to be reassessed, especially with the planned transfer of minor drainage systems to the S&WB in 2025. If the City reallocates some or all of its Fair Share revenue to the S&WB, it should also consider increasing funding for Public Works to maintain its street maintenance improvements. Furthermore, Public Works should be subject to the same transparency and accountability standards as the S&WB, and New Orleans & Company should provide more detailed reports on its use of short-term rental taxes.

To enhance the effectiveness of the Fair Share deal and improve oversight, BGR recommends that the City Council amend the March 2024 ordinance to ensure the S&WB receives its full Fair Share allocation without restrictions. The Infrastructure Advisory Board, which currently provides oversight of the S&WB’s Fair Share expenditures, should continue its role and potentially expand its functions to oversee any new funding sources. Future administrations are encouraged to maintain the advisory board’s oversight function as long as it remains effective.

The BGR report underscores the success of the Fair Share deal in securing valuable funding for New Orleans’ infrastructure while also identifying critical areas for improvement. Addressing these recommendations could help ensure that the benefits of the Fair Share agreement are maximized and equitably distributed.

For more details, the full BGR report is available on their website.

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