New Orleans City Council members Helena Moreno and JP Morrell are requesting changes to a state law that would give the council more time to review and approve property tax breaks — called payments-in-lieu-of-taxes, or PILOTs — for developments in the New Orleans Convention Center’s $1 billion River District neighborhood.
In a Jan. 5 letter to three state legislators — Sen. Royce Duplessis, Rep. Alonzo Knox and Rep. Mandie Landry, all New Orleans-based Democrats — Morrell and Moreno requested changes to a 2023 law, authored by Duplessis, that lays out the process for granting PILOTs in new developments around the convention center, including the River District.
The proposed changes would lengthen the PILOT approval process and require government bodies whose finances could be impacted by the tax breaks to be notified of any PILOT applications in advance of a council vote.
The request follows a Dec. 1 council vote to approve property tax relief to the River District developers to aid in the construction of a new regional headquarters for the Shell oil company. The tax break exempts the building from property taxes for 15 years — an estimated value of $21.6 million. The River District development team has said it will use some of the savings — an estimated $5 million — that result from the PILOT to develop affordable housing in the district. The developers currently say they plan to develop hundreds of affordable units there, though funding for them will likely depend on more property tax breaks and a new sales tax planned for the district.
Council members have complained that they were given too little time to review the deal after pressure from the development team. The notification provisions resulted from conversations with the Orleans Parish School Board, which receives a large portion of city property taxes and has since asked the council to rescind the deal.
“We believe that this will ensure Councilmembers, the public, and media are fully aware that a PILOT will soon be up for consideration,” Moreno and Morrell wrote regarding the requested extension.
Asked for comment on the letter, Morrell directed Verite News to Moreno, who declined to comment.
The current state law allows the New Orleans Exhibition Hall Authority Economic Growth and Development District, a governing body that oversees the River District neighborhood, to propose PILOTs for properties under its jurisdiction by submitting a proposal to the city’s Office of Economic Development before landing in front of City Council for final approval or denial. Currently, the law gives the city’s office of economic development 45 days to review PILOT proposals, then 15 days for the council to review them.
The law, however, does not explicitly require the council to use the full review period, which has led to a dispute between the council’s attorney and Councilmember Lesli Harris, who has been a strong backer of the River District. The Dec. 1 vote took place only four days after the council was briefed on the deal. According to a report in The Times-Picayune, a memo by the council’s executive counsel Adam Swensek said the vote was premature and thus illegal. Harris, as well as Jeff Schwartz, Mayor LaToya Cantrell’s director of economic development, both said the vote was valid.
Moreno and Morrell, it seems, believe Swensek’s opinion may have merit.
“The approval of this PILOT and its validity are now in question due to potential violation of directives in state law,” the Jan. 5 letter reads.
Moreno and Morrell are requesting that the law be amended to include a 90-day review period, including 30 days during which PILOT proposals appear on public meeting agendas before they go to a final vote.
River District Neighborhood Investors, the developers of the now-vacant land, defended the tax break in a Jan. 2 open letter, writing that they “have followed to the letter the processes and procedures for review and approval … consistent with other PILOTs awarded in the City of New Orleans.”
In a statement, Duplessis said that the existing legislation has “tremendous transparency measures that were requested directly by City Council members before it was passed in the state legislature.”
“If the two Councilmembers requesting additional changes believe that the law was not adhered to, they must further clarify as to why not, and explain how these requested changes would avoid any future scenarios,” Duplessis said.
In a Jan. 9 letter to constituents, Landry, whose legislative district includes the River District development, wrote that she was disturbed by the latest unfolding of the project, expressing dismay at not being contacted about the project as a whole. “Everyone should pay their fair share of property taxes — including the River District development,” Landry wrote.
“If this is so wonderful for everyone then why was this done so fast?” she said.
Landry’s open letter also raised other concerns about the River District development. She pointed to the New Orleans Exhibition Hall Authority Economic Growth and Development District’s approval of a modified agreement that bypassed the city council to set the operating terms for the River District and provide for increases in sales and hotel taxes levied in the development. Revenue from those taxes will be used for River District development, including affordable housing development, under the terms of the agreement.
The approval of this agreement came under scrutiny from Moreno and Morrell last week when the city leaders said that they were unaware for more than a month that the district board had greenlit the agreement.
If the legislature adopts the requested change, it would affect future deals in the River District. Shawn Barney, a member of the River District development team, told Verite News that the group plans to propose future PILOTs for buildings within the new neighborhood. And changes to state law would affect any of those future PILOTs.
“On our end, we maintain that the office building PILOT review and approval process was followed per the well-documented conditions and timelines in the statute,” Louis Lauricella, a leader in the development project, wrote in a statement.
Harris, whose council district includes the new development, maintained that the Shell PILOT followed the law and stressed her commitment to transparency and public input.
“Still, Senator Duplessis and his House colleagues should consider the At Larges’ request and include the entire Council and stakeholders in their discussions,” she said in a statement.
This story has been updated to clarify the dispute over the review period in the current PILOT law.
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