Louisiana Attorney General Liz Murrill’s office has sided with the development team of the $1 billion River District project in a dispute with several City Council members, who questioned the legality of their own votes authorizing a 15-year property tax exemption for a new regional headquarters for Shell.
Council members had approved the tax break, called a payment-in-lieu-of-taxes, or PILOT, in a 5-1 vote on Dec. 1.
The deal will exempt the building’s developers, who will retain ownership and lease it to Shell, from city property taxes on it for 15 years. That will save them an estimated $21.6 million, but it will mean that local agencies, including the city, the Sewerage & Water Board and the NOLA Public Schools District, will forgo those revenues. The School Board, which was not part of the decision-making process, has since asked the council to rescind the vote.
The disagreement hinges on how long the city took to review the deal before it went to that vote.
A 2023 state law provides for a 45-day review by the city’s Office of Economic Development for any PILOT proposals in the River District, followed by a 15-day council review. The vote approving the deal came only four days after council members were briefed on the deal by the city’s Office of Economic Development.
The council’s attorney later questioned the vote, arguing that it was illegal because the council did wait until the review period ended.
But in an opinion issued Wednesday (Jan. 24), Attorney General Liz Murrill’s office found that under the law, authored by Sen. Royce Duplessis, D-New Orleans, the city had a maximum of 60 days to review the proposal, not a minimum.
Murrill’s office wrote that the Office of Economic Development and the council could review and approve these tax breaks at an expedited speed — as long as the review period did not exceed the total allotted time, as defined in the law.
Earlier this month, New Orleans City Council members Helena Moreno and JP Morrell wrote to Duplessis requesting changes to the 2023 state law, saying in the letter that they had reason to believe the vote was illegitimate, “due to potential violation of directives in state law.” Though both council members voted in favor of the PILOT, they later objected to the process after Verite News reported that, following the council meeting, an economic development board overseeing the River District development quietly cut the city out as a party to a 35-year operating agreement for the residential and entertainment district.
The unelected board, called the New Orleans Exhibition Hall Authority Economic Growth and Development District, approved the agreement without the full council’s sign-off. (Councilmember Lesli Harris, who is part of the economic development board, was present for the later meeting and voted for the deal.)
Moreno said that the expected “respectful disagreement” about this state law is only one part of the broader taxation issues the state law brought about.
The law outlines the review and approval process for developments within the new Convention Center neighborhood. It gives the City Council final approval of property tax breaks — the PILOTs — after a governing body overseeing the River District submits a proposal to the city’s Office of Economic Development.
The council members’ requested change would double the review period of these proposals from 45 days to 90 days, and ensure that any PILOT proposal appears on public meeting agendas for 30 days before the vote.
The validity of the tax break comes down to the interpretation of a few lines in the law. Act 212 states that “the city council shall have fifteen days” to review the proposal, followed by an additional fifteen to approve or reject the PILOT. In a series of emails following the requested changes, council members and state legislators debated whether this time period constituted a maximum or a minimum. Duplesiss wrote in a Jan. 15 letter that the law provides the council “up to” 45 days to approve River District PILOTs.
The state’s top lawyer argued that the state law stipulates a deadline for the council and the city’s economic development to approve a PILOT, rather than a required review period..
“It is of our opinion that the time periods contained in [Act 212] are not required to be exhausted by New Orleans Office of Economic Development or the New Orleans City Council in order for the approval or disapproval of a PILOT proposal,” assistant attorney general Brett Robinson wrote on behalf of Murrill.
In a statement to Verite News on Wednesday (Jan. 24), Duplessis said that the attorney general’s opinion “affirms that the law we created gave the City Council ample opportunity for review and deliberation of the PILOT for the River District and that the Council’s 5-1 vote was in fact legal.”
“I hope that this legal opinion puts to rest the questions surrounding the legality of the council’s previous action and encourages our leaders to work together constructively to deliver needed development and progress that our citizens demand and deserve,” he said.”
State Rep. Mandie Landry, a New Orleans Democrat whose legislative district includes the Convention Center and surrounding areas, said she disagreed with the attorney general’s interpretation and maintained that the law required the city to use the full review period.
Still, she said, the opinion is likely to carry a lot of weight in the event of a court challenge. She noted that while the attorney general’s opinion is not legally binding, the determination “is likely to govern this matter, unless a party files suit and asks a court to make a determination.”
Alison Poort, the chief of staff for Harris — who has been a strong supporter of the River District and had maintained the legality of the Shell PILOT — says the attorney general’s opinion affirms that Harris’ office has followed all laws and procedures during the development process of the new neighborhood.
Poort said she hopes the attorney general’s opinion can dispel misinformation and politicking surrounding the development.
“It’s important that the community knows we have maintained transparency throughout this process; nothing about it was rushed,” Louis Lauricella, a member of the River District Neighborhood Investors group, the private developers selected to build the new neighborhood, wrote to Verite in a statement.
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