On April 4, 2024, BGR provided research-based guidance to New Orleans City Council leaders as they review economic development incentive programs. Our letter to the council president and vice president draws on our extensive body of work on property tax subsidies authorized by payment in lieu of taxes (PILOT) programs. The council leaders announced their review in February.
BGR is making the letter available on our website because members of the public and other policymakers have also expressed interest in the topic. They want to know how public bodies should evaluate and award discretionary incentives such as PILOT subsidies, which are typically negotiated with a private developer. A recent example, which sparked the New Orleans councilmembers’ review, is a PILOT subsidy for an office building at the proposed River District mixed-use development near downtown.
While the River District development has drawn attention to this type of incentive, PILOT subsidies have been used in New Orleans for decades. Developers and public officials often view PILOT subsidies as free money, but the subsidy is an investment of public resources. It should be made only if it furthers a defined policy priority, is proven necessary, and is as efficient, effective, and equitable as possible for the community.
Identifying such cases and securing the best deal for the public requires far more than a developer’s assurances. Our letter recommends that PILOT programs should, among other things:
- Adopt firm eligibility criteria
- Rely on expert analysis of developer requests
- Follow a transparent and consistent subsidy approval process
- Institute clear compliance measures
- Provide for program-wide oversight
Click here to access the main page for this letter. While BGR provided its guidance to New Orleans officials, it can be applied in other parishes that offer PILOT subsidies and similar discretionary incentives for economic development.