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The Faubourg Marigny is full of short term rentals.

An effort to raise taxes on short-term rentals to pay for New Orleans’ drainage needs moved one step closer to becoming law on Thursday.

House Bill 43, approved by the Senate Local and Municipal Affairs Committee without objection, would authorize an election in New Orleans in October to raise the tax on Airbnb, HomeAway and other short-term rentals by up to 6.75 percentage points. HB43 now goes to the full Senate for final passage.

HB43 is part of the overall infrastructure plan crafted by Mayor LaToya Cantrell, hospitality leaders and Gov. John Bel Edwards to raise $50 million in one-time money and up to $26 million per year annually – all to pay for better roads and upgraded sewage pipes and drainage pumps.

The other two pieces of the overall deal – House Bill 522 and House Bill 617 – passed the House easily last week and will be heard next week by the Senate Revenue and Fiscal Affairs Committee.

HB43 would generate up to $10.5 million per year, with 75 percent of the money dedicated for infrastructure and 25 percent for marketing New Orleans to visitors.

State Rep. Jimmy Harris, D-New Orleans, the bill’s sponsor, told the Senate committee that it would make short-term rentals pay the same tax rate as hotel guests.

The measure gives Cantrell more money for infrastructure. For the hospitality industry, it makes Airbnb and HomeAway guests pay as much as hotel guests and provides extra money to promote New Orleans.

HB522 would increase the tax on hotel guests by 1 percentage point and raise $12 million per year. HB617 would allow the Ernest N. Morial Convention Center to own a hotel that officials want to build at the convention center’s upriver end.

As part of the overall deal, convention center officials would sign an agreement with the city to provide $28 million in one-time money. The city would receive the other $22 million in one-time dollars from the state.

The New Orleans City Council on Thursday approved strict limits on on short-term rentals, a move that will likely reduce the amount of tax revenue available for Cantrell's infrastructure plan.


Follow Tyler Bridges on Twitter, @tegbridges.