The members of the Jean Adrien House Condominium Association thought they had a cheap, easy task on their hands when they planned to make some cosmetic repairs to their French Quarter building last month.
The job needed only a quick $400 fix. But when board members sought to get a city permit for the work, they were told nothing could be done until they agreed to pay the city almost $1,600 a year for a 200-square-foot gallery overhanging the St. Louis Street sidewalk.
The association, like many other property owners throughout the city, faces a change in policy rolled out by Mayor Mitch Landrieu’s administration over the past year that critics say seeks to scrounge up new money for city coffers literally out of thin air.
Owners of buildings with features such as galleries, balconies, stoops or fences that extend out into public space — and have done so, in many cases, for decades or even centuries — are being faced with a choice: pay the city rent in perpetuity on terms the administration sets or be denied permits for any work, no matter how small the job.
“We’re caught between a rock and a hard place here. We have this historic building with a historic gallery, and we’re prohibited from dismantling it, but we have to pay for it,” said Charlie Case, a board member of the Jean Adrien condo association. And, Case noted, the gallery on the building — built in the early 1800s — likely predates the city sidewalk it overhangs.
About 150 properties a year are now being asked to sign such agreements, which include liability waivers aimed at protecting the city from suits, at an annual cost that can run to thousands of dollars.
Administration officials say the policy is necessary to comply with state laws prohibiting the city from giving away property. But some of those who have run up against the new edict see it as governmental overreach and an attempt to profit from architectural features that have long been a part of New Orleans’ streetscape.
They warn that the policy could deter maintenance on buildings, make housing even less affordable and encourage many owners to hire contractors under the table to get around the new rules.
“It seems nothing more than a money grab: ‘You’re using our property, and we’re going to make you pay for it,’ ” said Justin Schmidt, a prominent land-use attorney with the firm Adams and Reese. “But you allowed me to do this way back when, so I should be grandfathered in.”
For the city to seek some compensation for the use of public space — what are known as servitudes and “air rights” — is not new, nor is it unique to New Orleans. But Schmidt, who has been handling similar issues for 18 years, said the rules and costs used to be more reasonable.
For years, he said, the city would seek agreements with property owners only for new construction that encroached on the city’s servitudes or when a property owner was seeking some sort of zoning change that required review by planners.
For existing buildings, the city would normally draw up a servitude agreement for a one-time fee of $500, Schmidt said. New construction would require a long-term lease from the city; developers could decide whether the cost of the offending feature was worth it or else change their plans.
That approach changed last year. City officials began reviewing applications for any kind of work permit — from major maintenance to paint jobs — and requiring properties to agree to pay a yearly fee for the encroachment based on the fair market value of land in the area.
The city’s formula calculates the value of those leases as 2.5 percent of the value of the land that existing features encroach on. The agreements include provisions allowing the city to increase the cost by up to 10 percent every five years.
New encroachments are valued at 5 percent of the land’s value. “Nominal” encroachments are charged a one-time fee of $350.
Landrieu spokesman Hayne Rainey said the point of the new policy was not to generate cash for the city but, first, to keep the city from being found liable for any accidents that could be blamed on the encroachments and, second, to comply with state laws preventing the city from giving away property.
“The city is not working to discourage property owners from having or building encroachments,” Rainey said in an email. “We are required by the Louisiana Constitution to receive fair market value for the use of public property, including air rights, in addition to keeping the public safe and establishing liability for encroachments on the right-of-way.”
Case, however, questions the city’s calculations. The fair market value of vacant land in the French Quarter, of which there is very little, is exceptionally high and based on little more than a single property sale in recent years, he said. Using that price to set the value of a gallery that overhangs a sidewalk but doesn’t actually take up any space at ground level is unfair, he said.
The city is identifying encroaching properties that require agreements as they apply for permits or other changes with the city and are found not to have servitudes, Rainey said. That process is being used because “sweeping enforcement (at one time) would be impractical,” he said.
A large proportion of properties in the city likely fall into the category of those having to pay, though the administration does not have an estimate of the total number.
The effect of the new policy has been felt acutely in the French Quarter, where most buildings have some sort of architectural feature that extends onto or over the sidewalk. But it also has cropped up in other historic neighborhoods and in Central City, where shotgun houses’ stoops often extend past the property line.
Other areas of the city also are potentially on the hook as well. On the downriver side of State Street, for example, the city actually owns about 10 feet of what most people consider their yards, well beyond the fences that surround many of those houses, Schmidt said.
Chuck Ransdell, a general contractor, said he first began encountering the new policy last fall and since then has worked on about 20 properties that have needed agreements. At least four of those property owners opted not to make repairs when they found out they’d be on the hook for a yearly payment, he said. That, he said, could encourage people to put off repairs or to do work without getting the proper permits and inspections.
“At some point, they all know it, they’re going to make people start doing weekend work,” he said. “People are going to do work on their houses on the weekend when (inspectors) aren’t checking.”
The policy also could cause some owners to do away with features that encroach on public property.
“Those have been there for 100-and-some-odd years. You don’t look to benefit from it just because it’s there,” Schmidt said. “I don’t think we want to encourage property owners to alter their historic buildings ... (just so) they’re not encroaching on the public right of way.”
The policy also could favor those who buy property in the Quarter — or elsewhere in the city — simply as a profit-making venture rather than as a home, for those owners would likely be more able to afford the costs, Ransdell said.
That’s something Case said he’s worried about as well. The members of his condo association are expected to take up the issue this week, and they likely will have to put off planned repairs until they can increase dues, he said.
“This is going to come as a shock to the rest of the condo owners. We’re going to have to increase our dues 5 percent or 10 percent to pay for this every year,” Case said. “And they’re going to say, ‘Maybe I should start renting this (condo unit) out’ ” as a short-term rental.
Follow Jeff Adelson on Twitter, @jadelson.