With an eye toward easing the tax burden on New Orleanians who live in neighborhoods where recent renovations have sharply pushed up the value of all homes, the City Council on Thursday called on the state to exempt longtime residents from big property tax hikes.
Specifically, the council's resolution asks the Legislature to consider a constitutional amendment to help residents whose tax bills have doubled in one year, who have lived in the city since 2004 and who have low to moderate incomes.
Council members said the idea is to help people who have seen their home values and resulting property taxes skyrocket due to pricey renovations on nearby homes.
Often, investors will buy an old property, pour in tens of thousands of dollars of renovations and quickly sell it for a profit, a practice commonly known as house flipping. The proliferation of short-term rentals in the city has made such flipping more common.
The council's proposal "doesn’t hurt anyone who has paid half a million dollars for a house," said Councilman Jay H. Banks. "But it also does not penalize people who have been living in neighborhoods their whole lives, who haven’t ever seen half a million dollars."
At least one state lawmaker who led a separate tax relief effort last year said getting buy-in for another relief measure so quickly could be difficult, however. Voters in November approved a proposal by Sen. J.P. Morrell, D-New Orleans, to phase in certain property tax hikes to ease residents' burdens.
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Under that amendment, if the assessed value of a residence covered by a homestead exemption rises by more than 50 percent, the increase would be phased in over four years. Morrell said it was directed primarily at helping homeowners in New Orleans and Lake Charles.
"The idea that voters are going to amend the constitution twice because New Orleans has a very specific problem and they want a very specific remedy, it's very interesting," said Morrell.
The council resolution, which has no practical effect or force of law, was sponsored by Banks, Cyndi Nguyen and Kristin Gisleson Palmer. Helena Moreno also added her name. It passed unanimously.
Affordable housing advocates have long said that expensive renovations of New Orleans homes, often spurred by the legalization of short-term rentals within the city, have helped drive out longtime residents.
While the council is already considering limits on short-term rentals, members now say the state should look into a constitutional amendment to exempt low- to moderate-income residents from higher property taxes if their homes' assessed value rises by 100 percent or more in a single year.
The council has suggested such a measure should be targeted at those who earn no more than 120 percent of the area's median income. In 2018, it would have benefited a family of four with income up to $78,720.
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The exemption would apply only to residents who have lived and owned homes in the city since at least 2004, the year before Hurricane Katrina.
Banks defended the latter restriction, saying that "in 2005, time stopped in New Orleans and started again" due to Katrina. "That is where all of this stuff accelerates," he said.
Andreanecia Morris of Housing NOLA praised the resolution. "The rate at which we are displacing native New Orleanians who can no longer afford to live in their homes is extremely alarming, and it affects each and every one of us," she said.
Other council members generally backed the idea, although Councilman Joe Giarrusso said any legislative study should consider whether helping one group of people unfairly burdens others.
"I want to make sure that as we are drawing lines, we don't forget about the people who are one bucket above (the line), that they are not being additionally burdened because of a rebate you are giving to somebody else," Giarrusso said.
Morrell, meanwhile, said a better idea might be for New Orleans' politicians to see how the recently approved phased-in tax collection idea works in practice.
The impacts of racist housing policies that 'redlined' New Orleans neighborhoods still resonate decades later.
He also said New Orleans could solve its own tax problems by changing its taxing structure to reduce the burden it places on its people.