In
recent years, a steady drumbeat of questions has risen over the
ever-increasing pot of money that the organization, which runs the city’s Convention
Center and Exhibition Hall, sits on. At the close of 2017,
it had over $150 million lying around in cash equivalents and for many years running
its revenues have exceeded its expenses by over $20 million annually.
That’s due to taxes which, if there’s any real
need to collect these in the first place, should better go to other pressing
priorities. Instead, with so much dough rolling in the Authority spends some on
matters that have nothing to do with its functions such as nearby roads and
public safety as a kind of peace offering to New Orleans, and banks the rest
with an eye on tremendous pie-in-the-sky capital projects that stray
further and further away from its actual footprint and/or mission.
The latest dream involves giving away a combination of tax breaks, rental payments for four decades, and $41 million in cash to build a hotel on Authority land, a deal the present value of which it claims comes in at around $165 million. It maintains that 1,500 extra rooms will expand the market size to attract more and bigger clients, bringing jobs and tax receipts.
But the independent Bureau of Government Research estimated
the present value of costs at about $330 million, using metrics industry
observers say capture better the actual amount. It also calls into question the
rosy future scenario painted by the Authority, arguing cannibalization of
existing business more likely would occur, a view in line with industry
observers.
Nor does the city seem that enthused with the
idea. Mayor LaToya Cantrell threw
cold water on it and pointed out as well that the city might have to
provide various legal reliefs for it to go forward.
(Ironically, or perhaps hypocritically, one of the
interests that would receive the heavy subsidization is New Orleans developer
Joe Jaeger. Months ago, perhaps more than anyone else, he raised
the alarm about a deal for the state to extend Harrah’s as the operator of
the land-based casino. Conducted some hurriedly and with considerable financial
sweeteners, it would have renewed the contract six years earlier without any
competition, for which in exchange in part Harrah’s would have built a hotel
about a fourth of the size contemplated in the present case. That extension died
in the Legislature, and now he’s part of this effort.)
Unfortunately, citizens and their governments have
no check on this action, or any spending decisions generally by the Authority. At
any time, it could decide to write the check, say it will exempt collections of
taxes and foot those bills itself, and grant use of its land (purchased nearly
two decades ago with its excess tax receipts). Only the fact that the governor
appoints nine and the mayor three members to the governing board constrains its
activities.
With Cantrell opposed, even as she has appointed
none of the current members if they wish to stay on they will have to consider
her wishes. Gov. John
Bel Edwards hasn’t said anything public about it, but a number of legislators
including those from the area have expressed a desire to redirect tax dollars
from the Authority to the city. A move like this again could energize such
efforts, which last
surfaced in 2017.
Building such a hotel might bring promised benefits.
But there’s no need to use taxpayer resources on that. At the same time, the
issue registers at yet another symptom of too much money going to an
organization with too little legitimately to do. Regardless of how this turns
out, lawmakers need to address the disease in 2019 by shuttling those dollars
to some other source with genuine needs, if these need collection at all.
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