Among the 14 constitutional amendments that voters statewide will decide on Tuesday, two would affect only New Orleans. Even so, voters in Bossier City, Bastrop and Bunkie will have as much say as those in Orleans Parish on whether they are added to the Louisiana Constitution.
Amendment No. 6 would allow New Orleans voters to decide in a future election whether they want to increase the special property taxes levied in the city to help pay for police and fire protection.
Amendment No. 13 would direct the city to sell lots in the Lower 9th Ward for $100 rather than at their fair market value, as now required.
To take effect, both amendments will need to pass both statewide and in Orleans Parish.
Amendment No. 6
Currently, the constitution authorizes New Orleans to levy property taxes of up to 5 mills each for police and fire protection without applying the homestead exemption that covers all other tax millages in the city. The proposed amendment would double the maximum authorized rates for the two taxes to 10 mills each.
Any actual tax increases would have to be approved by New Orleans voters in a subsequent election.
In all other Louisiana towns and cities, municipal taxes for general government services are not subject to the homestead exemption, which shields the first $75,000 of the fair market value of owner-occupied homes from state and parish taxes. In New Orleans, municipal taxes are covered by the exemption, except for these two levies.
Because the City Council has rolled the two taxes forward, they are currently levied at 5.26 mills for police and 5.21 mills for fire. They are expected to generate a total of about $34 million this year — a small fraction of the total budgets for both the Police Department and the Fire Department.
Increasing both taxes to the proposed new maximum of 10 mills would generate an additional $31.6 million for the two departments. However, that additional revenue could not be used to reduce or replace the city funding for police and fire services in the baseline year of 2013, when the city budgeted $134.5 million for the Police Department and $85.4 million for the Fire Department that year.
The new revenue from the higher taxes would have to be used for services that directly contribute to residents’ safety, and there is a question whether the biggest and most pressing need facing the Fire Department, for tens of millions of dollars to strengthen its pension fund, would qualify. However, both the Mayor’s Office and the firefighters union say they believe it would.
Proponents of the amendment say it is warranted because of the substantial needs facing both departments.
The Police Department has more than 400 fewer officers than the mayor says are needed, and money from the tax could be used to raise salaries to attract and retain more cops.
The Fire Department needs to upgrade and replace aging equipment, and the firefighters’ pension fund is in disastrous condition. The city faces a $17.5 million judgment for underfunding the pension fund in 2012, and the union plans to seek another $54 million from the city for three additional years of alleged underfunding.
According to the assessor’s records, the homestead exemption shields $4.5 billion of market value from most taxation in Orleans Parish. This represents more than 15 percent of the city’s total residential and commercial property tax base of $29.2 billion.
The Bureau of Governmental Research, a nonpartisan group, notes that the proposed amendment “would simply allow New Orleans city government to do what every other municipality in Louisiana can already do: ask voters to approve property taxes for police and fire services that are not subject to the homestead exemption.” It says the amendment “would provide a fairer basis for levying police and fire taxes,” should the voters deem them necessary in a future election.
Mayor Mitch Landrieu has endorsed the amendment, saying, “We need the flexibility for increased funding for more police and fire.”
City Council President Stacy Head and other council members also support it.
Amendment No. 13
This amendment would provide for an exception to the state constitution’s prohibition on donating or selling public property at less than fair market value. It would let the city sell property in the Lower 9th Ward to qualified purchasers, as defined by law, at a price set by the Legislature in a 2014 law.
That law would require the city to sell vacant lots that the New Orleans Redevelopment Authority has acquired through the Road Home program for $100.
The companion law establishes four tiers of qualified purchasers. Adjacent property owners who previously qualified under the now-defunct Lot Next Door Program would be given the first opportunity to purchase lots. The second opportunity would go to those who lease property in the Lower 9th Ward and have lived there for at least 18 months. The third tier would include former Lower 9th Ward residents, veterans of the armed forces, teachers, retired teachers and emergency responders. The fourth tier would include anyone who agrees to build a residence on the property and reside there for at least five years. Purchasers in the first two tiers would have to agree to retain and maintain the property for at least five years.
The law would prohibit the sale of lots to developers, corporate entities and anyone who has an active code enforcement violation or outstanding tax lien against property he owns.
The law defines the Lower 9th Ward as the area bounded by Jourdan Avenue, Florida Avenue, the St. Bernard Parish line and the Mississippi River.
This amendment is intended to jump-start the Lower 9th Ward’s still painfully slow recovery from Hurricane Katrina by making lots available for a nominal amount.
A recent study found that only 45 percent of Lower 9th Ward residential addresses that were receiving mail before the storm did so in June of this year — half the citywide percentage.
According to NORA, the demand for vacant lots in the Lower 9th Ward through the Lot Next Door Program was the weakest of any neighborhood, and few lots are selling on the open market.
Since 2006, NORA has sold 284 Lower 9th Ward lots acquired from the Road Home program. It still owns about 460 such lots, almost all of them vacant and subject to sale under the 2014 state law.
Despite its good intentions, however, many people have criticized the proposed amendment.
BGR points out that it does not require redevelopment of the lots to be sold. In addition, it “allows the Legislature to inject itself into a quintessentially local matter — the strategy for neighborhood revitalization and blight eradication. These are issues that should primarily be addressed by the city and NORA.”
Also, BGR notes, the state law would require the city to sell the former Road Home lots in the Lower 9th Ward even though the city does not own the lots in question. They are owned by NORA, which is a separate political subdivision under state law.
Further, BGR says, “the legislation lacks basic safeguards to ensure that the properties will be redeveloped. Only the fourth tier of purchasers is required to build and live on the property. Those in the third tier are not even subject to a specific maintenance requirement. They could let the properties deteriorate or flip them for a quick profit.”
The sales price “should be more closely aligned with the property’s true value,” BGR says. “The average sale price for vacant Lower 9th Ward lots sold through the Lot Next Door program was $2,830. The average appraised value of the remaining lots is about $3,650.”
The mandated $100 sale price would fall far short of covering even NORA’s transaction costs, which typically total $1,300 to $1,500 per sale.
Despite such criticisms, many Lower 9th Ward residents support the amendment, saying it could help get hundreds of blighted lots tended to and redeveloped.
“Amendment 13 simply states that Lower 9th Ward residents could buy these vacant lots for $100,” said Vanessa Gueringer, vice president and Lower 9th Ward leader of A Community Voice. “These properties have been vacant and blighted so that the city can hold them for sale at inflated prices for their developer friends. There is no enforcement that they develop the property into something of community benefit and an endless cycle of outsiders buying property over and over from tax sales just to keep it blighted. It is time to let the people have the property since we are the ones who have returned and are rebuilding our community.”