The $40 million public safety plan proposed recently by Mayor Mitch Landrieu and being considered by other New Orleans officials depends on having the bulk of its upfront costs covered by the Ernest N. Morial Convention Center.
The $23 million the Convention Center is expected to chip in toward the costs of an expanded surveillance camera network and a centralized Police Department command center to monitor the cameras may resolve some issues with how the ambitious plan will be funded.
But that deal, like the center's recent multimillion-dollar purchase of the former Louisiana ArtWorks building near Lee Circle for a culinary and hospitality training institute, has raised a question in some minds:
Should the Convention Center, a state agency flush with cash reserves to back projects aimed at bringing in more tourists and conventioneers, continue to collect tens of millions in tax revenue each year in a city where dollars for priorities including streets and police are far less than officials would prefer?
The Convention Center is one of the largest taxing entities in Orleans Parish, bringing in nearly $60 million a year from state-approved taxes on hotels, a sales tax on food and drinks throughout the city and other assessments.
In Orleans Parish, that places it behind only the city itself, the Orleans Parish School Board and the Regional Transit Authority in terms of the total taxpayer dollars that flow into its coffers.
Mayor Mitch Landrieu will face two big hurdles in implementing the new security plan for the…
That’s led to a healthy surplus for the Convention Center, which is sitting on $241 million in the bank. Those reserves were expected to grow by about $28 million this year, not counting whatever is spent on helping the city fund the security plan.
Board President Melvin Rodrigue said those hefty reserves are needed to bring in conventions and tourists and to help fund capital projects, including plans to help develop a hotel and retail complex on about 47 acres upriver of the Convention Center and to finance improvements on Convention Center Boulevard and nearby streets.
“We’re working on a lot of great projects. Those reserves that are in place are there for a reason, and we have every intention of putting them to good use,” said Rodrigue, who also is the president of Galatoire's Restaurant.
But the Convention Center’s sizable share of local tax revenue has come under scrutiny in recent years. In 2015, the Bureau of Governmental Research put out a report noting that significant chunks of revenue collected in New Orleans go to entities that are not under the city’s control, including the Convention Center and other entities focused on tourism rather than core city services.
The report suggested that the plethora of tax dedications in New Orleans, which give individual agencies -- such as the Convention Center, the state board that oversees the city's major sports arenas, and two tourism-promotion groups -- their own permanent funding streams, may be hurting the city’s ability to direct money to its most important needs.
“One would certainly prefer the city’s budget process to be able to prioritize better than the current situation allows,” Amy Glovinsky, president and CEO of BGR, a nonpartisan research group, said last week.
City officials have also suggested changes in how tax collections in the city are distributed, particularly the relatively paltry share the city gets from hotel taxes.
The Convention Center brought in about $58.2 million in tax revenue in 2015, according to BGR’s report -- about 5.5 percent of the total taxes collected in New Orleans that year. That was almost $10 million more than the Sewerage & Water Board collected for the city’s drainage system and nearly $16 million more than the Orleans Levee District took in to maintain the flood protection system.
Rodrigue said those dollars are needed for the Convention Center’s projects, which he argued benefit the city by bringing in millions of visitors who significantly bolster the city’s economy through the money they spend at hotels, restaurants, stores, bars and the like.
“We can ill-afford not to have those dollars,” he said. “Economic development through tourism has been extremely successful. It has a proven track record.”
Beyond that, he noted that the Convention Center kicks in money toward city projects. An $84 million project to remake Convention Center Boulevard also includes about $12.5 million for other nearby city streets and traffic signals to improve traffic flow in the area.
But that raises questions about whether the city should be able to determine its own priorities, or whether it should rely on the largess of another entity.
“It does strike one as an unusual power dynamic that speaks to the need to revisit that structure,” Glovinsky said of the situation.
The Convention Center's funding comes from a variety of taxes approved by the Legislature over the years. That includes about $15 million a year from a hotel tax that was imposed in 2002 to fund an expansion of the Convention Center itself. That plan was scrapped after Hurricane Katrina, and the site of the planned expansion is now envisioned as a hotel, retail and residential complex.
The board of the Ernest N. Morial Convention Center has completed buying the former ArtWorks…
Negotiations on that project, billed as a $1.5 billion deal with the Dallas-based Howard Hughes Corp. and local developers Joe Jaeger and Darryl Berger, began in 2015, and questions have been raised recently about whether it will ever happen.
“When you’re looking at a project in the neighborhood of a billion dollars, that’s a lot to talk about,” Rodrigue said in explaining the seeming lack of progress.
The Convention Center’s anticipated contribution to the city's new security plan, which has yet to be presented to or approved by the center's full board, would go solely toward the costs of construction and equipment, not the $3.8 million price tag for staffing and other items the city projects will be required every year.
“We certainly believe that we’ve been good partners with the city of New Orleans, and we’re going to continue to be good partners,” Rodrigue said. “Would another request come up that would make sense for us? I don’t know the answer to that.”