Authors of River District law push back on City Council requests for changes
22nd January 2024 · 0 Comments
By Josie Abugov
Contributing Writer
(Veritenews.org) – Two Louisiana state legislators behind a 2023 state law that set the stage for the New Orleans Convention Center’s River District project are pushing back against calls from New Orleans City Council members for changes they said would provide for greater transparency from the public officials and private development group overseeing the $1 billion residential, office and entertainment development.
On Jan. 5, Council President Helena Moreno and Vice President JP Morrell asked New Orleans-based legislators to consider amending Act 212 of 2023 to give the council more time to review proposals for long-term property tax breaks – called a payment-in-lieu-of-taxes, or PILOT – in the development. The proposal would give the council double the council’s review period from 45 days to 90 days and provide that any PILOT proposal must appear on public meeting agendas for 30 days before going to a vote.
The request came after the council voted to approved its PILOT, which will exempt the developers of a new regional headquarters for Shell, to be built in the River District, from paying city property taxes for 15 years. Moreno and Morrell have since questioned the legality of the PILOT, after the council’s attorney said the Dec. 1 vote came without legally adequate review time. The council members’ letter also pointed to “ongoing issues with transparency” surrounding the Shell PILOT and governance of the River District.
In addition to disputes over the legality of the Shell PILOT, City Council members expressed shock earlier this month when they learned that after the Dec. 1 PILOT vote, the New Orleans Exhibition Hall Authority Economic Growth and Development District, a state-created body that oversees development in the areas around the Ernest N. Morial Convention Center, moved to write the city out of a 35-year cooperative endeavor agreement governing operations and public subsidies for the River District, effectively bypassing the need for council approval.
The councilmembers have also questioned the legal validity of the Shell tax break, which is worth an estimated $21.6 million. But over the past week, the two legislators who sponsored the legislation that became Act 212 – Sen. Royce Duplessis and Rep. Alonzo Knox, both New Orleans Democrats – defended the law, saying it passed with extensive city input and already provides for adequate council oversight.
“If your requested changes are made, I do not understand how this will ensure a similar scenario does not occur in the future,” Duplessis wrote in a Jan. 15 letter responding to the council.
Duplessis wrote that economic development proposals are “often time-sensitive” and highlighted the River District development team’s current plans to build hundreds of units of affordable housing, using funding streams from the Shell PILOT and a two percent additional sales tax in the River District.
On Jan. 13, Knox responded in an email, saying that the council’s requested review period “seems excessive and counterproductive, potentially antithetical to spurring any economic development, jobs, and affordable housing developments in cities like New Orleans.”
Still, while he said he disagrees that the changes are necessary, he believes River District officials could have worked more cooperatively with the council.
“It seems that the spirit of trust and professional cooperation to deliberate on the process was not honored,” his letter said.
However, a third state legislator — Rep. Mandie Landry, whose district includes the new neighborhood – seems more open to the changes to Act 212, saying the current law is legally ambiguous and citing what she characterized as a rushed approval process for the Shell building’s PILOT.
“I intend to do what I can to address this property in the district that I represent, and hope that the City Council and Orleans delegation join in to make sure everyone pays their fair share of property taxes,” she wrote in an email to Verite this week.
Ambiguity in the law
The disagreements hinge on a few sentences, providing time for PILOT proposal reviews, in the current law.
Act 212 gives the city’s Office of Economic Development 45 days to consider and approve PILOT proposals from the New Orleans Exhibition Hall Authority Economic Growth and Development District.
It also gives the council – which under Act 212 has the controlling vote on River District PILOT proposals – a 15-day “review period” to consider the proposals followed by a 30-day “approval period” in which to vote on them. But the Dec. 1 approval of the Shell tax break came only four days after council members were briefed on the deal.
That led the council’s Executive Counsel Adam Swensek to write that the vote violated Act 212 because the council did not use the full review period. But the law does not explicitly say that PILOT proposals must lie over for 15 days before going to a vote.
Other officials, including Duplessis and Councilmember Lesli Harris, say the 15 days the law allows should be read as the maximum review period, which the council is free but not required to use.
“[The law] specifically provides the City with up to three months to review and take action on any PILOT proposal related to this district, including up to 45 days specifically provided to the City Council alone,” Duplessis wrote in his Jan. 15 letter. “Despite the availability of up to three months for review and action that was provided in the legislation, the City Council voted 5-1 to approve the matter in a more expedited timeline.”
Harris is a strong supporter of the River District, frequently pointing to the developers’ affordable housing pledges. As the representative of the council district that includes the River District land, she is part of the Exhibition Hall Authority Economic Growth and Development District and voted on Dec. 1 to enact the cooperative endeavor agreement without council approval.
Last week, Harris sent a three-page letter – complete with more than 40 pages of exhibits – defending the legality of the Shell PILOT and the necessity of the operating agreement. The note includes emails showing staff from Moreno’s office participating in the drafting of Act 212 last year.
“Senator Duplessis’ letter reinforces the history and collaboration of the state legislators and the City Council’s work on developing Act 212,” Harris’ office wrote Wednesday (Jan. 17) in response to a request for comment. “It correctly highlights how activating land that was vacant for 25 years benefits affordable housing, local hire requirements, construction timelines, and disadvantaged business enterprises.
An official in Morrell’s office said he is continuing to work on proposals to improve future incentive deals, providing for greater review and public input.
Monet Brignac, Morrell’s Director of Communications, told Verite that the council member’s office is “working on a comprehensive new framework on all economic incentives the City will offer.”
The River District debacle, she said, has highlighted that the city and its subdivisions “need to have a more deliberate and transparent process for granting any incentives or tax breaks.”
This article originally published in the January 22, 2024 print edition of The Louisiana Weekly newspaper.
