The Lost Penny

On hotel taxes, Cantrell close to securing part of ‘fair share’

By Beau Evans

Source: | The Times-Picayune

April 30, 2019

The closing of a deal to secure millions of dollars in immediate and continuing money for the city’s drainage infrastructure and the Sewerage & Water Board appears imminent for Mayor LaToya Cantrell. The negotiations in some respects could put more money in the hands of the local tourism industry, from which Cantrell had proposed securing the money she sought, while in other areas would pull both one-time and recurring money from the industry.

Official details are expected to be revealed at a 10 a.m. announcement Wednesday (May 1) in Baton Rouge, according to the mayor’s office.

The tentative deal follows months of negotiations between Cantrell, Gov. John Bel Edwards and hospitality sector leaders, who have at times pushed back on the mayor’s call for a larger share of tax revenues dedicated to tourism-focused groups. While the full scope of the deal has not yet been disclosed, some observers are calling it a win for Cantrell in the first year of her mayor term though totals being reported as of Tuesday were short of what she had sought.

Originally, Cantrell requested $75 million up front and another $40 million annually. According to sources, the deal looks to lock in $48 million in one-time money plus $27 million in ongoing revenues from a variety of sources.

Most urgently, the one-time cash infusion would help bolster the Sewerage & Water Board’s drainage system, which officials have said could run out of money by year’s end without a rescue.

“It will make a bigger dent than a zero, we know that,” said Bob Tucker, a longtime City Hall presence in New Orleans dating back to the Moon Landrieu administration. “It will help her to develop a higher level of confidence being passed on to the public of what can be done.”

The $48 million would come from a combination of contributions from the state, leftover federal disaster relief funding and the Ernest N. Morial Convention Center. The $27 million would draw from a new short-term rental tax that still needs the Louisiana Legislature’s blessing, the return of a 1% sales tax on local hotel bookings that also needs legislative approval and the rededication of existing tax revenues from the New Orleans Tourism Marketing Corp.

Sources familiar with the deal and recent negotiations asked not to have their names published, citing the sensitive nature of the discussions.

Cantrell has long pushed for a large chunk of funding to come from the convention center’s roughly $230 million in reserves, and the deal sources described this week would partly accomplish that aim. But it remains to be seen how the overall tax-revenue share of local tourism-focused groups might be affected.

If approved, revenues from the short-term rental tax measure winding through the legislature would be split with 75% going to toward infrastructure and 25% to tourism promotion, sources say, effectively increasing the tourism industry’s share of taxes in that regard. It’s unclear how much recurring money would be taken from the Tourism Marketing Corp. as part of the deal.

The mayor’s office and several hospitality industry representatives declined to comment on the deal’s details Tuesday.

The nonprofit Bureau of Governmental Research has been among the leading voices in recent years highlighting how tourism-focused groups in New Orleans collect a large share of local hotel tax revenues. In an email Tuesday, the group’s president and CEO, Amy Glovinsky, supported the legislation aimed at restoring the 1% hotel tax but held off on giving a full appraisal of the deal until all of its details have been announced.

“Once we know more, we will be in a better position to assess how well the terms of the deal address the concerns we’ve raised in our recent reports,” Glovinsky said.

Other observers were more effusive in their praise for the deal. Tucker, speaking over the phone Tuesday, credited Cantrell’s doggedness and the willingness of hospitality industry representatives as key to reaching an accord. Tucker, who has worked for five New Orleans mayors in different capacities, also said those factors helped push through a deal for infrastructure funding where past efforts from previous mayors have failed.

“When it comes to walking the talk, I think some of her predecessors had been conditioned and they sort of accepted ‘no’ as being ‘no,’” Tucker said. “She was able to stay focused and to make her case, time and time again, in spite of the ‘no’s.'”

Tucker also credited outside campaigning efforts, backed by the mayor, that appeared to drum up public support for the “fair share” narrative far more than past mayors had done in similar initiatives. The Cantrell-backed political action committee Action New Orleans has raised $235,000 since its creation last summer and tallied more than 720,000 views of its “fair share”-themed videos circulating on online platforms, according to the PAC’s communications director, Kristine Breithaupt.

Michael Hecht, president and CEO of Greater New Orleans Inc., described the deal as “a win for all parties” that ought to be a model for future efforts aimed at overhauling the city’s century-old drainage system.

“It demonstrates how we can work together in a way that safeguards both the city and the economy,” Hecht said.

Julia O’Donoghue contributed to this story.

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