New Orleans will get millions of dollars for roads, drainage; here are 3 big winners

By Tyler Bridges

June 2, 2019

New Orleans will receive tens of millions of dollars to replace antiquated sewage pipes, fix faulty drainage pumps and mend pothole-filled roads, mostly by levying higher taxes on visitors, after the state Senate on Sunday gave final approval to the final bill in an infrastructure money package.

In a sign of New Orleans’ infrastructure crisis, the city will use $34 million of the $50 million in one-time money it will receive not for repairs or upgrades but to pay overdue bills owed by the cash-strapped Sewerage & Water Board.

Passage of the three pieces of legislation over the past three days followed months of often tumultuous negotiations between Mayor LaToya Cantrell and leaders of New Orleans’ hospitality industry. They put aside their differences to announce the deal four weeks ago.

The three big winners appear to be Cantrell, Gov. John Bel Edwards and Stephen Perry, who is president and CEO of New Orleans & Co., the private entity that markets the city to conventions and other visitors.

Besides the $50 million in upfront money for New Orleans’ infrastructure needs, the multi-sided deal provides up to $26 million per year in the future for infrastructure, revamps the city’s tourism marketing efforts and authorizes the Ernest N. Morial Convention Center to own a giant hotel that center officials want to build next to the exhibition hall.

“I want to thank our mayor and governor for working together with the hospitality industry … in a holistic compromise,” state Sen. JP Morrell, D-New Orleans, who handled the legislation in the Senate, told his colleagues. “It’s very important that we make sure that the city of New Orleans does not continue to flood. We’re trying to solve our problems in-house and not on the state’s dime.”

While legislators have completed their work, the infrastructure package remains unfinished.

House Bill 43, passed by the Senate on a 31-1 vote on Friday, calls for the New Orleans City Council to authorize an election in October at which Orleans Parish voters will be asked to raise the tax on Airbnb and other short-term rentals by up to 6.75 percentage points. Rep. Jimmy Harris, D-Orleans, is HB43’s sponsor.

House Bill 522, passed by the Senate on a 31-2 vote on Saturday, will increase the tax on hotel guests in New Orleans by 1 percentage point. Rep. Neil Abramson, D-New Orleans, is HB522’s sponsor.

House Bill 617, passed by the Senate on a 33-0 vote on Sunday, authorizes the Convention Center to build and own the $550 million, 1,200-room hotel proposed for the upriver end of the giant exhibition hall. The bill also clears the way for the Convention Center to develop other vacant land it owns next to the site.

HB617 also consolidates disparate state rules for the Convention Center into state law and requires the often-opaque agency to operate with greater transparency. Rep. Walt Leger III, D-New Orleans, is HB617’s sponsor.

Edwards has said he will sign all three bills into law.

The governor emerges as a winner because he brokered the overall deal between Cantrell and tourism leaders and will now have another talking point when he campaigns in New Orleans for re-election during the coming months.

The governor agreed to provide the $50 million in one-time money from state funds — $28 million from $235 million of the state-owned Convention Center’s reserves and $22 million in unspent state disaster funds.

Edwards agreed to provide additional money by allowing the city to defer the repayment of $17.5 million owed to the state over three years.

Cantrell emerges as a winner because she obtained most of the money that she sought for New Orleans’ biggest needs: strengthening the city’s anti-flood defenses and fixing its rutted roads. The deal probably qualifies as the mayor’s biggest achievement during her first year in office.

The tax increase on hotel guests will yield $12 million per year.

The tax increase on short-term rentals, if approved by New Orleans voters, would generate up to $10 million per year, with the actual amount depending to some extent on the nature of restrictions to short-term rentals that the City Council is in the process of approving.

A property tax increase in the Downtown Development District would provide about $3 million more per year.

In winning approval for the package of bills, Cantrell gained admirers in the Capitol, which has often been hostile territory for her predecessors. She met with legislators one-on-one in New Orleans and hosted them in small dinners in Baton Rouge.

“She works to build bridges, to find coalitions, to ask people to work with her on the things that you can,” said Rep. Jack McFarland, R-Winnfield. “But she respects you when you can’t. She has a good understanding of people.”

McFarland said Cantrell’s willingness to work with others was exemplified when she supported a provision in legislation that will extend the Harrah’s New Orleans casino license for 30 years. The provision dedicates a portion of Harrah’s tax revenue for water projects in rural districts like McFarland’s.

“Legislators lined up to have their picture with her after she addressed the House” several weeks ago, McFarland said. “She wants to change the narrative of ‘New Orleans versus the state’ to ‘It’s New Orleans as part of the state.’ ”

Perry emerges as a winner because he fended off Cantrell’s attempt to take away a portion of hotel tax revenue that now flows to the Convention Center and New Orleans & Co. The Bureau of Governmental Research, a research and watchdog group in New Orleans, had recommended the change.

Instead, Cantrell and Perry agreed to impose an additional tax of 1 percentage point on hotel guests and to make short-term renters pay up to 6.75 percentage points more. That, in fact, represents another victory for Perry and his members because it would require that short-term rental guests begin paying the same tax rate as hotel guests.

Under the overall deal, Cantrell also agreed to allow Perry’s organization to absorb the city’s New Orleans Tourism Marketing Corp., which promotes the city to leisure travelers. This move will lead to the further privatizing of the city’s marketing efforts, with less opportunity for public scrutiny of those activities.

Bombastic and shrewd, Perry is a veteran political player. He served as Gov. Mike Foster’s chief of staff from 1996 to 2002 and since then has held his current job, which pays him more than $600,000 per year in salary to market the city to business groups and to navigate city and state politics for the hospitality industry.

Perry’s organization also will receive 25 percent of the $10 million projected to be collected each year from the short-term rental tax increase.

New Orleans & Co. will turn over about the same amount of money to the Regional Transit Authority — money that RTA officials claim the agency already is owed. The RTA could use that money — about $3 million a year — to expand bus service for hospitality industry workers and others.

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