Five years later, LaToya Cantrell’s ‘fair share’ deal delivering results, BGR says
By Ben Myers
Source: The Times-Picayune | Nola.com
September 7, 2024
Five years after New Orleans Mayor LaToya Cantrell struck a historic deal to direct tourism-related taxes to city infrastructure needs, a good government watchdog finds that her “fair share” arrangement has delivered needed recurring funding for critical infrastructure projects.
The 2019 deal with state and local tourism officials — one of Cantrell’s signature accomplishments — redirected a hotel tax from the state to the city and created a new tax on short-term rentals. That tax revenue, along with a $5 million annual payment from the city, goes to a separate fund overseen by a citizen advisory board.
A total of $104 million in recurring revenue has been raised thus far, with nearly all of that going to infrastructure, according to a report this week from the Bureau of Governmental Research. A small portion — less than 10% of the overall proceeds — has been used for tourism promotion.
“The Fair Share deal has made significant progress on meeting preventive maintenance at little or no cost to local ratepayers and taxpayers,” the BGR report says.
Making it happen
Cantrell announced the plan in the fall of her first year in office, calling for the city to get its “fair share” of hotel taxes that have long gone to tourism marketing groups, the Ernest N. Morial Convention Center and the then-Mercedes-Benz Superdome.
Past mayors had tried and failed to get any money out of those groups, and some lawmakers, including then-Gov. John Bel Edwards, panned her effort.
But Cantrell succeeded with help from a political action committee that pumped up the idea. The public’s outrage over the S&WB’s failings also shifted the political climate, as did support from BGR and business groups. Edwards also eventually got on board.
These days, the money is split between the Sewerage and Water Board, the city’s public works department and New Orleans and Co., the private nonprofit that serves as the primary tourism marketing organization.
The S&WB has benefitted the most, with $84 million dedicated to a new power source for drainage pumps, new water meters, improvements to water treatment plants and other projects, according to BGR. The S&WB also received more than $50 million in one-time funds as part of the fair share deal, which it spent on emergency repairs, overdue contractor invoices and other immediate needs.
The city’s public works department, meanwhile, has spent about $12 million on street and sidewalk repairs, while funding more than 30 positions focused on street maintenance.
New Orleans and Co. has used $4 million over the last two years to sponsor an annual live music series, a marketing campaign for the Audubon Aquarium Annual and other advertising.
More needed, transparency issues
The report notes that recurring funding has fluctuated with the pandemic and an unpredictable short-term rental market stemming from litigation and new city restrictions on the rentals. Proceeds topped $30 million last year, and are expected to remain steady this year, according to BGR.
The funding, while consequential, covers just a fraction of the city’s infrastructure needs. The S&WB, for example, says it has nearly nearly $1 billion in unfunded capital improvement projects. And it is still trying to secure complete funding for a $300 million power complex to stabilize drainage and tap water pumps, considered by many officials the top local infrastructure priority.
The power complex is scheduled to come online next summer, but as of now it is only funded to support drainage pumps. The S&WB says it needs another $30 million or so for drinking water pumps.
Meanwhile, the public works department needs $50 million annually for street maintenance, according to BGR.
The BGR report said it’s not clear how some of the funding is being used. While the S&WB, which receives the bulk of the cash, is required to present quarterly reports to the citizen panel, there are no such requirements for the public works department and New Orleans and Co.
New Orleans and Co. does provide expenditure reports, but BGR said they should include more details — especially concerning the balance of unspent funds.
New Orleans and Co. CEO Walt Leger III said the organization would provide more information in the future.
“I take it as good guidance,” Leger said of the report. “We’re happy to provide some additional information beyond what we’re already reporting, to reflect the balance of the funds.”
The Cantrell administration did not respond to an inquiry on Friday afternoon.
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