New Orleans water board trims back giant proposed rate increases

Published: Tuesday, May 08, 2012

Michelle Krupa, The Times-Picayune By Michelle Krupa, The Times-Picayune

Thanks to the promise of new federal and state revenue, Sewerage & Water Board officials have pared back a series of steep rate increases they first proposed last fall. Instead of nearly doubling them, the new plan — which has yet to be approved — would boost homeowners’ water rates by 80 percent to 82 percent during the next four years. The additional money would finance day-to-day operations, rebuild cash reserves, and pay for critical construction projects, including the city’s share of more than $2 billion in federal drainage work.

A new drainage fee also would be less than originally proposed, though the change would amount to about a dollar less per month for residential and commercial lots. Industrial lots would be assessed a fee about $4 a month less than originally envisioned. The fee, which doesn’t exist now, would be based on lot size and would be levied starting next year.

Under the new plan, the combined water and sewer bill for a typical homeowner would jump from about $52.50 a month this year to $94.92 a month in 2016 — $8.77 less than initially proposed. Midsize businesses would see their rates rise from an average $2,956 a month today to $5,334 a month in 2016 — nearly $500 less than first presented.

The original plan had called for increasing water and sewer rates by 15 percent annually for the next five years; the revised one would increase water rates by 12 percent a year and sewer rates by 13 percent a year over that same period.

The drainage fee would top out at $22.74 for homeowners and $26.89 for businesses in 2020.

The estimates do not include garbage fees collected on monthly water bills and remitted to the city’s Sanitation Department.

The water board plans to vote on the rate proposals in June, triggering votes by the City Council and the city’s Board of Liquidation. Meanwhile, the agency plan to conduct a citywide study of drainage service before seeking approval of the drainage fee from the water board, the council and voters citywide.

By far the largest influx of new money helping to drive down the proposed rate increases is an initial federal commitment of $141 million to update and fortify the agency’s electrical plant, which has broken down four times since Hurricane Katrina.

Madeline Goddard, the S&WB’s deputy general superintendent, said the improvements include relocating a Mississippi River water intake station, now housed in an antiquated facility at Oak Street; upgrading turbines and boilers used to generate electricity; hurricane-proofing the power plant building and an emergency fuel storage tank; and fortifying the underground power distribution network.

Read more

“Large boiler rupture sparked New Orleans water trouble,” Michelle Krupa, Nov. 25, 2010

Consultant’s study that led to rate proposal, September 2011

“New Orleans eyes new FEMA money to fix water agency power plant,” David Hammer, Nov. 15, 2011

New rates as published by the New Orleans Sewerage & Water Board, May 1, 2012

PowerPoint explanation of power plant retrofit plans, May 2, 2012

New Orleans Sewerage & Water Board resolution approving deal with city to accept money for power plant retrofit, May 16, 2012

The mayor, state and federal officials still must approve the renovation plans, Goddard said, adding that design and construction likely will take three years.

The money is part of $247 million that FEMA awarded to New Orleans in November to prepare for future disasters. Ryan Berni, a spokesman for Mayor Mitch Landrieu, said the mayor made improving the power plant a top priority after a mechanical crash in November 2010 led to a 41-hour boil-water advisory across the east bank.

Also helping soften the proposed rate increases is a $9 million loan from the state Department of Environmental Quality, as well as the early repayment of nearly $22 million that the city fronted for emergency utility repairs and the legal claims settlements, officials said.

In addition to financing daily operations and construction projects, the rate increases would help the agency rebuild a cash reserve equal to 200 days of routine expenses, a key threshold that would improve the agency’s bond rating and its borrowing ability. The water board also wants to hire more skilled workers for all aspects of the operation, to install automated water meters, and to perform more inspections and maintenance of fire hydrants.

Meanwhile, S&WB officials are working to respond to complaints voiced at public meetings on the rate and fee proposals.

Top among the concerns was the impact of steep increases on elderly and disabled residents. Officials said they are considering expanding the customer-financed “water help” program for bill payment and plumbing repairs, reducing late-payment fees and conducting a pilot program that would restrict the water flow to delinquent customers rather than shutting off water altogether.

Residents also said they want infrastructure improvements to be made “equitably” across the city. Agency officials said they would distribute maps of construction work and document the use of FEMA dollars. They also plan to cut in half the amount of water they provide to public and nonprofit users within five years.

Michelle Krupa can be reached at mkrupa@timespicayune.com or 504.826.3312.

© 2012 NOLA.com. All rights reserved.

Maya Rodriguez / Eyewitness News

METAIRIE, La.– Workers tap away on computers, eager to come up with new computing and engineering ideas at the offices of Geocent.

“We do a lot of work with NASA on the new manned space flight program, with the military on different computer systems, as well as other technology,” said Geocent CEO Bobby Savoie.

The company started in 2008 with 75 employees, but since then, that number has tripled to more than 200 employees – and they’re not done yet.

“We’re just always looking for good talented individuals,” said Keith Alphonso, Geocent’s Chief Technology Officer.

It is just one example of a growing number of jobs in the New Orleans metro area, which helped it land at number 13 for best big cities for jobs in Forbes. The magazine called the metro area’s job market “resurgent.”

“New Orleans is a very strong brand. People who haven’t been here, want to be here. When people visit here, they want to figure out how to live here,” said Janet Speyrer of UNO’s Division of Business and Economic Research.

Speyrer said the greatest growth in jobs lies in technology and energy, and not just oil.

“Everybody wants to attribute it to the oil industry, and we have been a place where oil has been an important part of our economy,” she said, “but I think it really was all along oil and natural gas, and it’s oil that’s high in price and natural gas that’s very low in price at this time.”

Also helping the job growth: state incentives, which have helped to attract not just movie productions, but have also been used to bring in some of the very tech companies behind the job growth.

“Our image around the country has improved dramatically and that, combined with the tax credits, has made it much easier to build a technology company here,” Savoie said.

The Forbes ranking is based on information gathered from the Bureau of Labor Statistics. They looked at past and current job growth, as well as long-term trends.

Written by Staff and wire reports

May. 5, 2012

WASHINGTON — A federal rule that requires installation of permanent mechanical pool chairs for the disabled at public swimming pools and spas will cost too much and expose small business owners to lawsuits, the hotel industry says. Disability advocates argue that the alternative — portable pool lifts — can limit access and enjoyment of pools by disabled people.

As a result of widespread misunderstanding about the rule and complaints from hotel owners, the Department of Justice has extended the original March 15 deadline for compliance to May 15, and is considering delaying it until September.

The department is reviewing comments submitted in March and April.

A spokesman said the department is considering only extending the deadline — not stripping the requirement altogether.

“If a fixed lift is affordable and easy for that hotel, they need to provide a fixed lift,” DOJ spokesman Mitchell Rivard wrote in an email. “If only a portable lift is affordable and easy for that hotel, they can use a portable lift. If they already have a portable lift, they should explore whether it is affordable and easy to attach the lift. If no lift is achievable, they should make a plan to achieve access when it becomes readily achievable for them.”

The rule change was expected to affect the city of Chillicothe’s efforts to open the Donald M. Smith Memorial Pool in Yoctangee Park. City officials say the cost wasn’t the biggest issue, but getting the mechanical chair and installing it likely would delay the pool’s opening for weeks.

Private clubs and pools owned by neighborhood associations are not affected by these Americans with Disabilities Act regulations, which would affect as many as 300,000 public pools nationwide and cost as much as $1 billion to implement.

For Christa Bucks Camacho, an Ellicott City, Md., woman with muscular dystrophy, having access to a swimming pool is “more than having a recreational alternative.”

“It is a quality-of-life-issue,” Camacho said at a hearing April 24 in front of the House Judiciary Committee.

In January, the DOJ released technical standards that tell hotels how to make sure their pools comply with the ADA.

The 2010 ADA standards did not specify whether mechanical pool lifts must be portable or “fixed” — permanently installed to the pool. The latest requirements specify that owners of large public pools may install fixed lifts “to the extent that it is readily achievable to do so.”

This last phrase has drawn concerns from many hotel association representatives, who fear it will lead to a flood of fines and civil lawsuits.

The DOJ could charge $55,000 for the first violation and $110,000 for any subsequent violation. The Justice Department has said it will investigate any complaints of non-compliance but will give pools with financial hardship and a savings plan more time to comply.

The high cost of installation already has forced some hotel owners to close their pools rather than pay for the chair lifts.

When Camacho spent a year in a full-body brace after her surgery, swimming helped her regain muscle strength and independence. She said that her experience with portable lifts — a more popular and less expensive alternative — has been largely negative.

“When I ask, a portable lift is not always made available even when there is one,” she said.

Fixed lifts are “there and ready whenever a person with a disability wants to swim,” testified Ann Cody, director of policy and global outreach for BlazeSports America.

Costs for fixed lifts can range from $2,500 to $10,000, with installation depending on local regulation, said Tim Jensen, director of vendor relations for national supplier Wilkins Solutions.

Installation can cost $500 to about $3,000 in states such as California, testified Hemant Patel, chairman of the Asian American Hotel Owners Association, representing 20,000 U.S. hotels.

Jensen said ADA compliance is “not a new thing” and hotels should try to meet the May deadline.

“The general consensus is that it’s the right thing to do,” Jensen said. “The challenge is with the economics of investing per pool lift.”

ADA regulations instruct hotels to buy one fixed lift for each large pool, hot tub and sauna. The 235,000 to 310,000 hotels needing to upgrade may face total costs of $1 billion, according to the Association of Pool and Spa Professionals.

A special tax credit is available to help smaller employers make ADA-related accommodations, according to the 2012 ADA pool requirements.

Patel said members of the AAHOA said their pool lifts are rarely used.

Minh Vu, counsel for American Hotel and Lodging Association, said the cost of defending a lawsuit, along with increased liability from children and disabled people unfamiliar with pool lifts hurting themselves, could end up forcing some hotel owners to close public pools.

Camacho and Cody said lifeguards could help disabled people use the lift and that previous studies have not indicated that pool lifts endanger children.

“Aren’t pools inherently dangerous for children to begin with?” Cody asked.

Several bills have been introduced in Congress to force the Justice Department to allow pool owners to decide if a portable lift is better suited to their pool needs. A bill sponsored by Republican Rep. John Mulvaney of South Carolina would allow small businesses to install portable lifts even if they are otherwise able to install a permanent lift.

House Judiciary Committee member Jerrold Nadler, D-N.Y., said such bills are unnecessary.

A “mom-and-pop outfit that operates three hotels will never be required to take the same steps as the Marriott,” Nadler said. “While these delays are being granted, Americans with disabilities are still waiting, and they already have been waiting a very long time.”

NEW YORK (AP) — How do you sell Times Square and the Grand Canyon? The Carolinas and California?

Residents of Japan, Canada and the United Kingdom are getting a taste Tuesday of the United States’ first-ever marketing campaign aimed at boosting tourism.

The print, web and video ads released Tuesday were created by Brand USA, a partnership of government agencies and private companies. The consortium was developed to act like the tourism ministries of countries such as Ireland, Italy or Israel.

It’s the first time that the U.S. has marketed itself as a tourist destination to people living in other countries.

While tourism has increased globally over the last decade, the U.S. slice of those travelers has fallen, due in large part to complicated visa procedures and heightened security that followed the Sept. 11 attacks. The U.S. had a 17 percent slice of the global tourism spending in 2000, but that has fallen to just over 11 percent today. About 6 percent of tourists globally last year came to the U.S. — that’s behind France.

The 10 years after the attacks are often referred to as the “lost decade” for U.S. tourism, because new procedures drove millions of international travelers to other countries. Many European countries have reaped the benefit of the U.S. tightened restrictions. More Chinese tourists, for example, now go to France each year than the U.S.

The average overseas visitor to the United States spends $4,000 per trip, according to the U.S. Travel Association.

Japan, Canada and the U.K. were chosen as the first round of targets because the top-spending tourists in the U.S. come from those countries, which also have relatively light U.S. travel restrictions. Canadians, the top international spenders within American borders, spent $24 billion last year.

A few weeks from now, the ads will spread to Brazil and South Korea. A handful of other markets will follow. Brand USA plans to spend about $12.3 million on advertising in the next three months.

“Dollars are tight today and we want to be very thoughtful about where and when we spend them,” said Stephen J. Cloobeck, the chairman of Brand USA and CEO of Diamond Resorts International. “But we’re doing we’re doing all this with a smile and a sign that says ‘Welcome to the United States.’”

The print ads feature shots of various U.S. spots including New Orleans’ French Quarter and the Redwood Preserve in California with the tag line “Discover this land like never before.” The video ads’ soundtrack features a song called “Land of Dreams,” with lyrics and music singer-songwriter Rosanne Cash, the daughter of country music icon Johnny Cash.

Brand USA is also working with government agencies to reduce wait times for visas and make other changes to encourage more international visitors. Last year, for example, the wait for a Chinese tourist to secure a visa for travel the United States was about 6 months; now it is less than a week.

The group is operating with funds set aside two years ago under the federal Travel Promotion Act.

NEWTON, Mass. — May 1, 2012 — /PRNewswire/ — TripAdvisor®, the world’s largest travel site*, today announced the winners of its 2012 Travelers’ Choice® Destinations awards. In the fourth year of its awards, TripAdvisor has honored 440 outstanding destinations in 37 markets across the globe, including lists for Africa, Asia, Australia, the Caribbean, Central America, China, Europe, India, Mexico, the Middle East, South America, the South Pacific, and the United States.

The Travelers’ Choice Destinations awards honor top travel spots worldwide based on millions of valuable reviews and opinions from TripAdvisor travelers. Award winners were determined based on the popularity of destinations, taking into account travelers’ favorites and most highly rated places.

Top 25 Travelers’ Choice World Destinations:
1. London, England 14. Sydney, Australia
2. New York City, New York 15. Beijing, China
3. Rome, Italy 16. Prague, Czech Republic
4. Paris, France 17. Las Vegas, Nevada
5. San Francisco, California 18. Bora Bora, French Polynesia
6. Marrakech, Morocco 19. Shanghai, China
7. Istanbul, Turkey 20. Honolulu, Hawaii
8. Barcelona, Spain 21. Los Angeles, California
9. Siem Reap, Cambodia 22. New Orleans, Louisiana
10. Berlin, Germany 23. Cape Town, South Africa
11. Chicago, Illinois 24. Chiang Mai, Thailand
12. Florence, Italy 25. Dublin, Ireland
13. Buenos Aires, Argentina

Top 25 Travelers’ Choice U.S. Destinations:
1. New York City, New York 14. Savannah, Georgia
2. San Francisco, California 15. Boston, Massachusetts
3. Chicago, Illinois 16. Branson, Missouri
4. Las Vegas, Nevada 17. Atlanta, Georgia
5. Honolulu, Hawaii 18. Houston, Texas
6. Los Angeles, California 19. Sedona, Arizona
7. New Orleans, Louisiana 20. Napa, California
8. Seattle, Washington 21. Lahaina, Hawaii
9. San Diego, California 22. Austin, Texas
10. Orlando, Florida 23. Philadelphia, Pennsylvania
11. Washington, D.C. 24. Charleston, South Carolina
12. Portland, Oregon 25. Kailua-Kona, Hawaii
13. San Antonio, Texas

“The TripAdvisor community has once again helped pinpoint hundreds of the most amazing and beloved travel destinations of the year,” said Barbara Messing, chief marketing officer for TripAdvisor. “For travelers planning their big annual vacation or just a weekend getaway, these awards highlight awe-inspiring travel locations of all varieties around the globe.”

For the complete list of 2012 Travelers’ Choice Destinations winners, sponsored by LAN Airlines, go to http://www.tripadvisor.com/TravelersChoice-Destinations.

©2012 TripAdvisor, Inc. All rights reserved.

SOURCE TripAdvisor

April 29, 2012
By Michelle Krupa, Times- Picayune

Aiming to streamline government and seal off avenues to corruption, New Orleans residents after Hurricane Katrina pushed to consolidate public offices and require political appointees to be chosen based on their fields of expertise. But despite a campaign pledge to rein in the city’s nearly 150 boards and commissions — including a few where profligate spending has piqued prosecutors’ interest — it appears that Mayor Mitch Landrieu and local tourism leaders have been quietly pushing to create a new board to govern a proposed downtown hospitality district, though the mayor on Friday sought to distance himself from the effort.

Under proposals by state Sen. Ed Murray and state Rep. Walt Leger III, both New Orleans Democrats, the district’s board would be comprised of as many as 11 appointees, about half of whom would serve at the mayor’s pleasure and without set terms.

The others would represent the city’s six main public and private tourism associations. The directors of those groups generally are close allies of Landrieu, who in his previous job as Louisiana’s lieutenant governor served as the state’s top tourism official.

Though voters wouldn’t directly choose any of the hospitality board members, the body would make policy decisions, and have the power to levy taxes and issue bonds, according to the bills.

The bills would raise millions to promote the city and keep downtown — the French Quarter, in particular — sparkling as civic leaders aim to attract 13 million visitors annually by 2018. About 8.75 million people visited New Orleans last year.

The initiative also aims to create a funding stream to maintain $30 million in infrastructure improvements that the Ernest N. Morial Convention Center-New Orleans’ board last month promised to make in and around the French Quarter in preparation for next year’s Super Bowl. Another $10 million in FEMA money is slated to be spent in coming months on the neighborhood’s crumbling streets and sidewalks.

Landrieu, through his spokesman, repeatedly has declined to say why he won’t push for the proposed tax increases in a more traditional way, by asking the City Council — through his annual budget proposal, perhaps — to put the recommended tax increases on a citywide ballot, rather than running the matter through a brand-new “superboard.” Since taking office in 2010, the council has approved two Landrieu-proposed property-tax increases and a doubling of trash fees.

Spokesman Ryan Berni on Friday said, “Tourism industry officials and other residents have argued that another board should be created to provide additional oversight of the dollars raised by these specific taxes.

“Clearly, the administration wants to streamline government and have less bureaucracy so that the city is able to quickly deliver services the public deserves and meet the goals of the hospitality district,” Berni said by email. “Unfortunately, some folks have lost sight of the big picture. The clock is ticking, and we haven’t reached consensus. This great opportunity may pass us by.”

In all, the hospitality bills propose raising an additional $16 million a year by boosting citywide taxes on hotel-motel occupancy and overnight guest parking, as well as increasing the sales tax on dining and drinking within a zone bounded by the Mississippi River, the Pontchartrain Expressway and Claiborne and Elysian Fields avenues. The proposed increases would have to be approved by voters citywide.

About $11 million of the new revenue would be split among the New Orleans Tourism and Marketing Corp. and the New Orleans Convention and Visitors Bureau to spend on advertising, stakeholders have said. The remaining $5 million would be invested within the zone for infrastructure maintenance and possibly to enforce city rules related to noise, trash and other quality-of-life matters.

Councilwoman Kristin Gisleson Palmer, whose council district includes much of the proposed zone and who attended a closed-door meeting of stakeholders Friday morning, said having a board administer the new taxes would ensure the revenue would not wind up in the city’s general fund, and then possibly get spent outside of tourism hot spots.

She added that hotel and motel representatives want assurances that the revenue will be dedicated to tourism marketing and infrastructure maintenance.

“The hospitality industry at this point is agreeing to tax itself,” Palmer said. “They want a guarantee that we are going to clean the French Quarter. They want to ensure that that money goes to the areas in which everybody agrees upon.”

But some residents and business owners, particularly those in the French Quarter, have expressed concerns. They say the board as envisioned is too powerful, too beholden to the mayor and simply unnecessary.

“The proposed hospitality legislation raises a number of questions and issues,” said Janet Howard of the watchdog Bureau of Governmental Research. She cited the imposition of a new district on top of existing ones, the “appropriateness of the proposed boundaries and governance,” and provisions that would allow the board to authorize tax-increment financing districts and other sub-districts.

BGR plans to take a formal position on the bills after they’re heard in committee next week.

Murray this week confirmed that negotiations are ongoing among lawmakers, Landrieu aides, tourism leaders, property owners within the zone and the French Quarter Management District, a 5-year-old state agency formed to dispense Hurricane Katrina recovery dollars within the historic neighborhood.

“I’ve heard the concerns from a lot of directions,” Murray said, adding that he’s not wedded to any model, or even “whether there should be a new entity.”

“I’m not sure if there will be an independent board at this point,” he said Friday. “There might not be a new board.”

Calling the situation “really fluid,” Murray said he would prefer that the City Council retain taxing authority within the district.

Murray said he intends to present some version of the legislation Thursday at the next scheduled meeting of the Senate Local and Municipal Affairs Committee.

Leger could not be reached for comment.

At a public meeting last week, members of the French Quarter Management District unanimously backed a resolution that would strip the hospitality-zone board of three key powers: to levy property taxes, to issue bonds and to authorize tax-increment financing.

“I have concern about at-will appointments by the mayor,” French Quarter business owner, attorney and board member Robert Watters said.

Some board members said they want to control any new tax revenue earmarked for the French Quarter. The 13-member board includes members named by local resident and business groups, as well as by the mayor and the local council member.

Meanwhile, the president of the community group Vieux Carre Property Owners, Residents and Associates blanched at the possibility that the hospitality-zone board could lack anyone who lives or owns property in the proposed district.

“Who decides how that money is spent and what happens to it, I think, should come from the people who are being affected by it,” Carol Allen said.

Darryl Berger, a developer and Landrieu ally who serves on the management district board, said during last week’s meeting that he would “love the idea” of using existing community boards, including the FQMD’s, to administer the non-advertising money. But, Berger said, he’s gotten “pushback” from Landrieu aides and tourism officials who want more experienced appointees.

“We don’t have a great track record so far,” he said. “We have a terrific group, but the French Quarter Management District hasn’t actually done anything yet.”

Berger added that those doling out the cash should represent the entities that would be taxed, with the largest revenue generators being hotels and motels.

April 29, 2012

By Rebecca Mowbray, Times-Picayune

For real estate developers, visiting the Industrial Development Board of New Orleans and asking for a property tax break is a worthwhile step as they map out financing for their projects. According to an analysis by the Bureau of Governmental Research, the board has rejected only one request for a property tax break since 1997.

View full sizeTimes-Picayune archive

The board said no to a 2007 application to expand the Staybridge Suites hotel at 521 Tchoupitoulas St.

To Janet Howard, president and chief executive of the government watchdog group, declining only one of scores of applications in 15 years suggests that the Industrial Development Board, a group of citizens appointed by the mayor and the City Council to help spur economic development, is basically a giveaway to developers.

“The cost is really quite significant for taxpayers,” Howard said. “You would expect the sort of group that gives those breaks to have really rigorous policies and procedures in place for evaluating these things, but the IDB lacks very basic things that are necessary to do this in any kind of rational way. It’s operating in a strategic void.”

The Industrial Development Board, which was created in 1972 as a conduit for issuing revenue bonds, and which was reactivated in 1997, considers applications for payments in lieu of taxes, or PILOTs, which set taxes at fixed rates that are lower than what developers would normally pay. The rationale behind PILOTs is that some development projects generate enough in sales taxes and other economic activity that it is worthwhile to encourage the developer by offering him a property tax break.

Many industrial development boards around the state file annual reports with the Legislative Auditor in Baton Rouge, but the New Orleans board does not. The mayor’s office was not able to say whether the board files annual audits with the city.

The board has been particularly active since Hurricane Katrina, because it wanted to address blight and a dearth of jobs returning to the city, and because prospective developers sought to magnify opportunities that came with the Gulf Opportunity Zone bonds, the tax exempt bonds made available by the federal government to assist Louisiana with business development after the storm.

Since Katrina, the Industrial Development Board has helped developers build or rebuild apartments, shops, a hotel and office tower by freezing their tax bills at below-market levels. The redevelopment of the city’s “big four” public housing complexes have benefited, and many of the projects sprouting up in the Loyola Avenue-Superdome area use PILOTs as part of their financing.

Walter Flower, an investment counselor who joined the Industrial Development Board in 2008 and became chairman in 2009, said he can’t speak to the board’s work going back 15 years, but he takes issue with BGR’s assessment. Since 2006, Flower said his board has received 65 applications seeking PILOTs. Of those 65 applications, 24 were granted for an approval rate of 37 percent.

The difference is that Flower’s tally takes into account projects that were awarded PILOTs but never get off the ground and, as a result, never took advantage of the tax break.BGR, in contrast, tallies instances where the board actively told a developer it wasn’t interested in the project.

Flower said his board conducts a cost-benefit analysis in evaluating every project to make sure the economic activity generated by a project is greater than the tax revenue given up. In recent years, the board has added provisions to increase the city’s tax collections if a project ramps up more quickly than expected. The board also has developed a job match program with the Housing Authority of New Orleans, and now requires developers who get PILOTs to give 40 percent of the construction jobs on their projects to Orleans Parish residents.

“The city is giving them a benefit. They need to reward the city by hiring locals,” Flower said.

The Industrial Development Board is also working closely with the city’s economic development department and the NOLA Business Alliance, the city’s public-private partnership for economic development, to create common policies so that developers know what to expect when they ask the city for economic incentives. They also hope to begin working with the city tax assessor to get a sense of what projects should be worth.

Aimee Quirk, Mayor Mitch Landrieu’s adviser for economic development, said the efforts represent great strides for the city. “There’s never been any kind of policy in place,” Quirk said. “We’re kind of excited because we don’t know that it’s ever been coordinated.”

But, she added, it’s a work in progress. “We still have areas to improve,” Quirk said.

Standards and policies needed, critic says

Howard said these efforts are not enough. While millions of dollars have been taken off the tax rolls for as long as 30 years, there have been no standards for what type of projects should be eligible for subsidy, few standards for what recipients must deliver to the city in exchange for the tax break, and no policies capping subsidies based on a project’s value.

She also said that giving up millions of dollars of tax revenue in exchange for temporary construction jobs may not be the best use of city resources.

The result, BGR says, is that the Industrial Development Board has simply become an item on a developer’s financing checklist, and the city may be giving away decades of future tax revenue on projects of marginal economic development value.

“The city has never really articulated a strong economic development policy to guide their investment,” Howard said. “You look at the policies and procedures and you can’t tell why someone is getting a tax break and someone else isn’t.”

Estimating how much property tax revenue is lost to PILOTs is difficult because once buildings are taken off the tax rolls, the assessor stops assessing them. Years ago, the assessor had to sign off on tax abatements from the Industrial Development Board, Williams said, but the practice was discontinued.

“We never knew what PILOT programs were with whom, and when they begin and when they end,” Williams said.

Williams said he’s concerned about fairness and wants to make sure that any entity that should be paying taxes is doing so. To test a way the Industrial Development Board structures property tax exemptions, Williams sued Columbia Parc, the remake of the former St. Bernard housing project, and challenged its tax-exempt status. Williams lost in Orleans Parish Civil District Court, but the case is on appeal.

Williams said it’s up to the Industrial Development Board to decide when it makes sense to give up tax revenue, but there ought to be mechanisms for determining whether a project is worth it. “The last thing the assessors office wants to do is be the cog that’s stopping economic development, but there’s got to be some standards,” he said.

‘An unfair competitive advantage’

BGR says the fact that several projects given preliminary approval for PILOTs never used them, such as the downtown Home Depot and the Robert Fresh Market on Robert E. Lee Boulevard, suggests that the subsidies weren’t critical. BGR also points out that in some cases the board granted more substantial breaks than originally contemplated.

The former Dominion Tower, New Orleans Center mall and garage, for example, paid taxes of $352,000 annually before being sold to Zelia LLC, a company owned by the family of Saints owner Tom Benson. The IDB’s own economist recommended that the board set a PILOT of $193,000, already a substantial reduction of the taxes on the idle properties, but the board decided to cut the taxes on the property even further, and set the 15-year PILOT at half the original tax bill, or $176,000 per year. The PILOT didn’t take into account the fact that the properties will be renovated and worth much more, BGR said.

The following month, when Poydras Properties Hotel Holdings LLC, developer of the neighboring Hyatt hotel, came before the Industrial Development Board, Poydras Properties said that since Zelia got a deal to pay half of its taxes as a PILOT, it wanted the same deal. The Hyatt owners were already paying a tax bill of $625,355 that was greatly reduced from the nearly $2.3 million they were paying when the hotel was open before Katrina, according to the IDB’s analysis. Poydras Properties requested a payment of $325,000 for 15 years. Although the IDB’s economist recommended a 10-year deal at $625,000, the board voted instead to do a 15-year deal with payments set at $320,000 for the first five years, then increasing in subsequent years based on the hotel’s performance.

The board also ignored pleas by the Greater New Orleans Hotel & Lodging Association not to award PILOTs to the Hyatt because it would violate a long-standing principle of fairness.

At the time, hotel association executive director Mavis Early wrote the IDB saying that her group “opposes the use of payments in lieu of taxes for any hotel development. This procedure has never been used for hotels in the history of the city and sets an unfair competitive advantage to any hotel that would receive it.”

Early noted that tax collections support the delivery of services in the city, and someone has to pick up the tab. “If these taxes are not fairly and consistently assessed, then ultimately, other taxpayers will bear the burden of increased taxes to pay for services and infrastructure improvements,” she wrote.

An essential for developers

Developers say PILOTs are essential to getting projects off the ground.

Josh Collen, vice president for development at HRI Properties, said PILOTs are important to developers because they provide certainty about tax bills.That’s especially important in the first few years, when the project is still ramping up and expenses are critical.

Collen said the cost-benefit analysis done by the city protects against bad investments because projects won’t get approved unless they deliver economic benefits that are greater than the forgone tax revenue. He also said the city doesn’t really lose anything because without the PILOT, the project wouldn’t get built.

Collen said that HRI only asks for PILOTs that it believes it really needs. It asked for one on the conversion of the Hibernia Tower into apartments because commercial finance has been difficult in recent years, and the tax break was essential to making the redevelopment numbers work on a prominent but nearly vacant downtown building. Collen said the city’s analysis has gotten more stringent, and negotiations over the Hibernia PILOT were challenging. “The city wasn’t giving up any more than it needed to make the project happen,” Collen said.

But Howard said that looking at whether a company can pull off the project without the tax break is the wrong question, because the developer may have not put enough of his own money into it, or may have made the project too extravagant.

What IDB officials should be considering, Howard said, is whether the project at hand represents the best investment for the city’s future tax revenue. To evaluate that question, the city needs to have policies that can’t be waived on what types of businesses are eligible for breaks. It should evaluate requests under different criteria depending on whether they purport to eradicate blight or create permanent jobs, with a formal scoring system and the size of any break tied to the level of benefit.

“No one sits down and says, is this a good investment? How does it compare with other investments? The basic questions that you would expect never get addressed,” Howard said. “The end result has been this ad hoc, developer-driven process which allows the larger developers to take their tax rates down below the effective tax rates of people.”

Quirk said the city looks at projects in a “holistic manner,” taking into consideration their individual merits and whether they could be catalytic. Quirk said the city is trying to continually improve the process, and could soon have a joint policy document among different economic development agencies.

The Industrial Development Board and the city say they have stepped up their criteria for review, and are considering a scoring system, but they don’t like the idea of hard-and-fast rules, because the city’s economic development priorities evolve. “I think it can be helpful as a guideline. I don’t think it’s the final answer,” Flower said of a scoring system.

April 29, 2012

By Bruce Alpert, Times-Picayune

WASHINGTON — Outrage over lavish spending at a 2010 General Services Administration conference in Las Vegas has produced rare bipartisanship on Capitol Hill, with the Republican-led House following the Democratic-controlled Senate last week in voting to cut conference spending by 20 percent. That legislation, and some calls to curtail federal government travel even more, is causing concern at the New Orleans Convention and Visitors Bureau, which pegs government meetings at roughly 9 percent of the $1 billion it says meetings and conventions generate for the city’s economy.

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Stephen Perry, the bureau’s president and CEO, said no one is defending the excesses of the $823,000 the GSA spent for the Vegas convention. There are rules and procedures in place, he said, that should have prevented the no-bid contracts and extensive and expensive pre-event travel and lavish parties.

“It’s frustrating for us that instead of taking steps to make sure that rules are being abided by that there’s effort to curtail travel when it is one of the ways for government leaders to get outside of Washington and actually serve their constituents,” Perry said.

The congressional effort to trim government meetings and conventions comes at a critical time for New Orleans. The city is hosting a three-day conference beginning May 13 by the Society of Government Meeting Planners consisting mainly of officials who plan government meetings.

There had been hope that the meeting, which will include workshops and exposure to New Orleans attractions, will bring more government conventions to the city — though limits being imposed by Congress could frustrate that goal.

There is declining support in Congress for government meetings, even from those who represent communities that depend on conventions.

Sen. Mary Landrieu, D-La., said New Orleans welcomes business and industry leaders who choose the city for meetings because of “all the tourist opportunities, food and culture that can’t be found anywhere else in the country.”

“But when it comes to government-sponsored travel, we owe an important responsibility to the taxpayer, and government agencies must be held accountable for their spending,” Landrieu said.

Both the House and Senate passed their new restrictions on government meetings last week by voice votes with little controversy.

‘The party’s over’

It’s not that government officials don’t have alternatives, said Sen. Tom Coburn, R-Okla., who offered the amendment reducing agency meeting budgets by 20 percent from 2010 levels and limiting most conferences to a $500,000 budget. His bill would allow conferences to rely more on private financing, as long as the financing is disclosed and steps are taken to avoid conflicts of interests.

“Congress has finally said the party’s over when it comes to conference spending,” Coburn said.

The House also passed similar language, adding it to a bill creating a single website where Americans can search for information on how government agencies, departments and other recipients spend federal tax dollars.

Speaker after speaker in the House made mention of the GSA Las Vegas conference that featured a clown, a mind reader and a rap video making fun of the excessive spending — in this case $823,000 for a meeting of 300 people that included lavish food spreads and hotel rooms for friends and family of the event organizer, according to the GSA inspector general.

“In light of the GSA scandal, I think most Louisianians would agree that government waste of taxpayer dollars cannot be tolerated under any circumstances and must be eliminated,” said Rep. Steve Scalise, R-Jefferson. “We can still have a vibrant tourism industry while simultaneously eliminating wasteful government spending.”

N.O. represents a bargain

Government meetings in New Orleans cost less than in other venues and far less than private-sector events because the federal government has a much lower maximum reimbursement rate for food and hotels in the city than it does in other regions, Perry said.

“It’s also popular with government meeting planners because in addition to the famous high-end restaurants we have many restaurants where you can get excellent meals for $8, $9 or $10 and meet that per diem,” Perry said.

The same GSA Western Region that went high-roller in Las Vegas paid $655,000 for its 2008 meeting in New Orleans, and Perry said he knows of none of the excesses reported during the 2010 event.

Charles Sadler, the executive director and CEO of the Society of Government Meeting Planners who is now planning for the group’s May conference in New Orleans, said the abuses uncovered at the GSA meeting in Las Vegas are “very disturbing.” But he said it would be wrong for government to take a “knee-jerk approach and dramatically reduce or shut down government meetings.”

Government conferences and meetings, he said, help government agencies perform better by exposing them to good practices by employees in other offices and allowing them to interact with individuals who rely on their services, Sadler said.

Letter to the Editor, Times-Picayune

My husband and I recently visited New Orleans for my 10-year Tulane Medical School reunion. It was delightful to spend the weekend with old friends and to enjoy the city that holds a special place in our hearts.

We were especially happy (however, not at all surprised) to see that the spirit of your city has not been broken by the unimaginable challenges that it has faced in recent years.

When we arrived home I was terribly sad to realize that I had left my favorite necklace in our hotel room at Loews. I was sure I’d never see it again. But guess what? A wonderful member of the housekeeping team, Ms. Rachel Robertson, had found my necklace and turned it into security. The integrity of Ms. Robertson’s character reflects the greatness of the city that she calls home.

Thank you, Ms. Robertson, and thank you, New Orleans, for rekindling our faith in the human spirit! We can’t wait to visit again.

Sarah Estrada

Paradise Valley, Ariz.