Lanny Keller: The Metro Council in tiff over tax-increment financing _lowres

Advocate staff photo by PATRICK DENNIS -- Mayor Kip Holden

When East Baton Rouge Parish Mayor-President Bobby Simpson took office in 2001, the grand plan for revitalizing downtown Baton Rouge was on the drawing boards, but practically speaking, it faced a huge stumbling block: The blighted block of the old Capitol House hotel was an obstacle to progress.

After at least a decade of failed efforts, the blight was eliminated when the Baton Rouge Area Foundation made one of its splashiest and most effective social-philanthropy investments, renovating what is now the Hilton hotel on Lafayette Street.

It now overlooks a downtown that is alive with activity, dramatically revived in the wake of the expensive project — and subsidized to this day by a big tax break agreed to by the state and city-parish government.

The conservative Simpson worked with legislators, including Kip Holden, then a Democratic state senator, on the Capital House project’s TIF, tax-increment financing. “The life of downtown will be greatly enhanced by what happens here,” Simpson said in one contentious meeting in 2003. Simpson was right, even though Holden was in 2004 to wrest the mayor’s office from him and, ironically enough, enjoy the benefits of downtown revitalization.

Today’s debate over TIFs for a couple of downtown hotels is not meaningfully different from the arguments surrounding the Capitol House — that it was getting a tax break for private developers, with the government picking winners in the marketplace and diverting money from more important uses.

All true. Had a TIF not been granted, free enterprise alone might have restored the eyesore on Lafayette Street, but probably not very soon; we might still be waiting. And even then, the tax break was not optional for the redevelopment of the Capitol House site. Hotel developers by then had already baked into the cake the receipt of tax breaks. Such concessions were expected of city halls across the country, if the politicos wanted riskier investments in downtown hotels.

It is less the common phrase “corporate welfare” than just plain extortion. And city halls are almost as dependent on the influence-peddling with tax breaks as the developers are. Most city halls kowtow to three important interest groups: developers, public employee unions and the internal job machine for white-collar salaries for the well-connected.

Concerns of a dozen years ago about TIFs seem quaint in light of a political culture of giveaways at all levels of government.

So what’s a Metro Council going to do when it is clearly time to curb the tax breaks? And if, at the same time, there’s a prime example of a reasonable justification for a TIF — renovation of the old State Office Building on Third Street to a boutique hotel?

Our Metro Council, true to form, has almost fallen to pieces over this. Council members have been unable to articulate a strategy for why they’ve granted one TIF for the proposed boutique hotel on Third Street but failed last Wednesday to grant another for a Courtyard Marriott just down the street. Both are far smaller breaks — 2 percentage points off local sales tax — than the original Capitol House deal. The last one isn’t a renovation of any building, as it would stand on a parking lot. Both projects might be good for downtown, but clearly they will not have the transformative effect of the original Capitol House TIF. One is from a local developer who got approval, and an out-of-towner didn’t.

Should the last two have been granted? One of the reasons councils don’t do this very well is they are politicos who loathe to say “no” when influential insiders are saying “yes” to spending the coin of the political realm, other people’s money.

By this point, the TIFs matter less than the perception that rejection wrongs the last applicant for playing by the rules because the Metro Council politics of TIFs has changed.

Lanny Keller is an editorial writer for The Advocate. His email address is lkeller@theadvocate.com.