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New Orleans Mayor LaToya Cantrell, right, walks to the podium to announce a cooperative effort to battle prescription opioid abuse, heroin use, and violent crime. A press conference was held at New Orleans City Hall on Tuesday, April 16, 2019.

A deal to raise hotel taxes to help fund infrastructure repairs in New Orleans saw a tumultuous 24 hours, with Mayor LaToya Cantrell agreeing to the plan Tuesday before abruptly withdrawing her support that night and leaving lawmakers working to get the agreement back on track Wednesday.

The rapid swings in the prospects for the agreement left representatives of the city, the tourism industry and Gov. John Bel Edwards’ office without a final proposal Wednesday evening, though more talks were planned into the night.

Some lawmakers said the ruffled feathers of the previous day had been smoothed over and they expected the long-negotiated deal would be finalized in coming days, though the details were still being hammered out.

“We’re still working through the amendments,” state Rep. Walt Leger, D-New Orleans, said. Leger is the lead sponsor of a bill that is crucial to negotiations dealing with the Ernest N. Morial Convention Center which were at the center of Cantrell’s decision to derail the deal Tuesday night.

If the new round of negotiations succeeds, the deal would deliver tens of millions of dollars a year to the city for infrastructure work from new hotel and short-term rental taxes and roughly $48 million in an upfront infusion of cash for the ailing Sewerage & Water Board. Cantrell has been fighting for that money since last year.

But the deal is beginning to come under scrutiny from other interest groups, particularly from affordable housing advocates who had been eyeing short-term rental taxes as a way to raise money for more affordable homes in the city.

The status of talks late on Wednesday represented a setback from Tuesday afternoon, when all sides apparently were in agreement and things had progressed far enough that press releases from both the governor and mayor announced what was expected to be a triumphant announcement with all sides standing shoulder-to-shoulder on Wednesday morning.

Those plans were abruptly scrapped hours later, after Cantrell’s team said they objected to the final language of Leger’s bill, which would pave the way for the Convention Center to begin work on a publicly subsidized 1,200-room hotel next to the center.

Exactly what objections the administration raised were unclear.

One source familiar with the negotiations said there was nothing in the proposed version of Leger’s bill that hadn’t already been approved as part of the negotiations. Another source said there was a hang-up with specific provisions dealing with the Convention Center money that would be involved in building the hotel and the terms for the lease of the publicly owned land where it would be built.

Rep. Neil Abramson, a New Orleans Democrat and Cantrell’s floor leader in the Legislature, said Tuesday night that the mayor's team simply needed to review late-delivered amendments and make sure they lined up with what the two sides had already agreed to.

Cantrell spokesman Beau Tidwell, however, said shortly afterward that the then-current version of the measure was “unacceptable.”

The Cantrell administration’s abrupt decision to pull out of the deal Tuesday night set off a flurry of activity Wednesday in the Capitol.

Cantrell showed up at the New Orleans delegation’s weekly lunch as usual, and she, Abramson and Leger all spoke to the lawmakers assembled there.

“They still have a few kinks in it,” Rep. John Bagneris, D-New Orleans, said of the status of the agreement.

Lawmakers and officials representing the mayor continued to talk throughout the day, with Abramson and Cantrell Chief of Staff John Pourciau, who has led the negotiations for the mayor’s side, huddling in a hallway for 20 minutes late in the day.

More discussions were scheduled for Wednesday night.

Getting the agreement back on track quickly is crucial. If lawmakers get moving on the bills by next week, they would be able to get the deal through both chambers by the end of the session June 6, but there would be little margin for error.

The exact details of the agreement have not been made public, but sources familiar with it have described some of its components.

The proposal basically would involve raising taxes on hotels and short-term rentals in New Orleans to generate money for city and S&WB infrastructure work.

Such a deal would achieve many of Cantrell’s goals when she launched her “fair share” campaign in the fall, which sought to redirect tax money that now goes to the Convention Center and tourism promotion groups to the city’s failing infrastructure.

The final plan does not require any of those tourism or hospitality entities to accept reduced funding — in fact, it would boost the money available to at least one group — but it does provide the bulk of the money Cantrell had sought.

The deal also includes about $48 million in one-time money needed to cover a funding shortfall for the S&WB’s drainage system that could see it run out of cash before the end of the year. About $28 million of that would come from the Convention Center.

The plan would also raise about $27 million in yearly revenue for the city.

That includes a 1 percentage point increase in hotel taxes that would raise about $12.5 million a year. The increase would require the support of two-thirds of each chamber of the Legislature and the governor's approval.

The plan also includes increasing the tax rate on short-term rentals by 6.75 percentage points, which would bring it in line with the rate charged on traditional hotel rooms. That would raise about $10.5 million annually. About three-quarters of that money would go to city infrastructure, with the rest going to the tourism promotion group New Orleans and Co.

The short-term rental tax increase would go into effect only with the approval of New Orleans voters. The measure that would set up that vote, House Bill 43, is scheduled to be heard before the House Municipal, Parochial and Cultural Affairs Committee on Thursday morning.

But directing the short-term rental taxes to infrastructure runs counter to promises by the City Council, now grappling with how to revise the taxes and regulations on homes rented out to tourists. The council has announced a goal of setting taxes and fees high enough to generate about $20 million a year for affordable housing, to help counteract the upward pressure of the short-term rentals on long-term housing costs.

That would likely be impossible if the legislative deal were to go through, since the housing initiative would rely heavily on the same tax that Cantrell wants to spend on streets and pipes.

HousingNOLA Executive Director Andreanecia Morris said that while she supports the mayor’s desire to redirect tourism revenue to more pressing city needs, she could not support taxes on short-term rentals going to tourism groups rather than affordable housing. A plan that split the short-term rental money between housing and infrastructure could be acceptable, she said. 

Ensuring residents can afford to live in the city should be as important as making sure the pumps work, she said.

“If the city’s constantly flooding or houses are flooding, that’s not good,” Morris said. “At the same time, if no one lives here, who cares if the city floods?”

The short-term rental tax is particularly important as a source for funding affordable homes because it would not require higher taxes on residents, a dicey proposition for even crucial services.

New Orleans is now woefully behind affordable housing goals that called for 1,500 units to be created a year. Only about 2,210 units have been created since 2016.

Morris said that were affordable housing groups able to get access to the full $20 million the City Council has sought, they could build about 1,000 homes a year.

“This is kind of our last chance to get the kind of resources that could dig us out of the hole,” Morris said.

Editor's note: This story was updated on May 2, 2019, to clarify Andreanecia Morris' position on where money from the short-term rental tax should go.


Follow Jeff Adelson on Twitter, @jadelson.​