A multi-sided deal crafted by Mayor LaToya Cantrell, Gov. John Bel Edwards and the New Orleans hospitality industry to help solve the city's road and drainage woes easily cleared a key hurdle in Baton Rouge on Wednesday.
The state House passed three bills that would implement the agreement, thanks to a united Orleans Parish delegation and the support of Cantrell, Edwards and hospitality leaders.
No lawmakers spoke against any of the measures, which are seen as issues local to New Orleans.
The overall deal would provide tens of millions of dollars for New Orleans’ infrastructure, revamp the city’s tourism marketing efforts and authorize the Ernest N. Morial Convention Center to own a massive hotel that it wants to build next to the center.
House Bill 522 (passed 74-18), House Bill 43 (approved 70-18) and House Bill 617 (passed 92-0) now all advance to state Senate committees for consideration.
For the full agreement to take effect, the three bills require Senate approval, and New Orleans voters in October will have to approve HB43, which would increase the tax on short-term rentals in the city.
State Rep. Neil Abramson, D-New Orleans, asked his colleagues to approve the measures “for what is an enormous need,” citing “equipment issues” and "burst pipes.”
The three bills, the product of weeks of arduous negotiations, would provide something sought by each side, while each had to give up something.
Cantrell and New Orleans residents won the biggest prize: $50 million in one-time money for the cash-strapped Sewerage & Water Board and up to $26 million in annual revenue for ongoing efforts to fix up roads and beef up the city’s drainage system.
But the money is about 25 percent less than Cantrell had sought.
The state also agreed to allow the city to delay the repayment of $3.5 million per year in loans over five years, or a total of $17.5 million, with the money going to infrastructure work.
Edwards agreed to delay that repayment and have the state funnel the $50 million in one-time money to the city. In return, he will be able to take credit for providing the cash as he campaigns in New Orleans this fall for re-election.
The recurring revenue for infrastructure would largely come from higher taxes on hotels and short-term rentals, money that would be freed up by merging two tourism marketing agencies, and higher property taxes in the Downtown Development District.
Hospitality leaders would benefit by settling a fight with Cantrell that threatened to poison their relations and by folding the New Orleans Tourism Marketing Corp., a public agency, into New Orleans & Co., a private tourism promotion entity.
With HB43, they also won the increase in the short-term rental tax by up to 6.75 percent, which would equalize the short-term rental and hotel tax rates. HB43’s sponsor is Rep. Jimmy Harris, D-New Orleans.
The hospitality industry also would receive 25 percent of the revenue from the short-term rental tax for its marketing efforts.
That provision has drawn the ire of housing advocates, who along with several City Council members have been eyeing the short-term rental tax money as a way to fund more affordable housing.
The short-term rental tax revenue for tourism marketing would be roughly offset by the Tourism Marketing Corp. giving back to the Regional Transit Authority the .25 percent in sales tax that the tourism agency has been receiving. The RTA could use that money — about $3 million per year — to expand bus service.
The hospitality industry succeeded in fending off attempts to divert tax revenue from tourism marketing to infrastructure.
In exchange for all of these gains, the hospitality leaders accepted an additional tax of 1 percentage point on hotel guests. That proposal is contained in HB522 by Abramson.
HB617, sponsored by Rep. Walt Leger III, D-New Orleans, would let the Convention Center own the 1,200-room hotel proposed for the upriver end of the giant exhibition hall. The center’s plans call for a private nonprofit, Provident Resources Group, to own the hotel.
In exchange for having the right to own the hotel, the Convention Center would provide $28 million of the $50 million in one-time money for the S&WB. Of the $28 million, $20 million would come from the center’s reserves of $235 million; $8 million would come from funds unspent on other projects.
The other $22 million in one-time dollars would come from state Hazard Mitigation Grant Program money that remains unspent after previous disasters and from a “revolver loan fund” in the Division of Administration from Hurricane Katrina.
Convention Center officials also agreed to a demand by Cantrell that the hotel would give money to the city in lieu of paying property taxes. The center would also have to pay money in lieu of property taxes when it develops other parcels of vacant land adjoining the proposed hotel.
Of the $50 million in one-time money for the city, Cantrell is planning to use $36 million to pay bills owed by the S&WB and $14 million to upgrade key anti-flood equipment.