In a move to promote the redevelopment of storm-ravaged City Park, a New Orleans City Council committee agreed Thursday to a plan under which the city will let the park have as much as $3 million in sales tax revenue that otherwise would go to the city.
The plan for a City Park tax increment financing district was endorsed by the Budget Committee and is almost certain to win passage by the full council next week.
It would let the park use as much as $500,000 a year for six years in revenue that normally would go to the city as part of its 2.5-cent share of the tax on sales of goods or services in the park. The money will be used to pay for “economic development projects” and infrastructure improvements spelled out in the park’s 2005 master plan.
The state will be asked to match the city’s contribution by letting the park keep an unspecified share of the 4-cent tax the state collects on sales in the park.
The special taxing district was authorized last year by the Legislature. Sen. Ed Murray, D-New Orleans, sponsored the measure, which was approved overwhelmingly by both chambers.
City Park CEO Bob Becker said the idea originated with Mayor Ray Nagin.
As with any tax increment financing district, or TIF, the revenue eligible for diversion from the city’s general fund will be that collected above a base-line figure, in this case the $83,500 in sales tax the city collected from the park in 2006, the first year after Hurricane Katrina.
For example, if the city’s share of sales tax revenue in the park in 2010 totals $400,000, the city would get $83,500 and $316,500 would be put into a special fund to pay for park projects. If the tax hits $700,000, the city would get $200,000 and the park its maximum share of $500,000.
Katrina’s floodwaters devastated the park and shut down almost all operations for many months. Some activities have yet to resume. However, sales in the park are expected to increase sharply as money-making activities such as golf, tennis, amusement rides, facilities rentals, catering and concessions sales resume or expand.
Since the storm, park officials have assembled nearly $70 million in federal, state, city and philanthropic dollars to finance dozens of repair and improvement projects.
The idea of a TIF is that by giving up its claim to potential tax revenue it is not now receiving, a city or other governmental unit can spur construction of desirable projects that will create economic development and, after the TIF expires, generate enough tax revenue to offset the money lost while the TIF is in effect.
Although the Bureau of Governmental Research, a local nonpartisan watchdog group, often has been critical of proposed TIFs that would benefit private developers, it raised no objections to the City Park plan.
Councilwoman Jackie Clarkson said she favors TIFs only if they promote public purposes.
The Nagin administration and the council have been trying for at least a year to develop a document spelling out what types of TIFs the city will endorse and under what conditions.
In approving an ordinance introduced by Councilwoman Shelley Midura in December, the Budget Committee also approved several amendments worked out by city and park officials in the past few days.
One limits the size and duration of the park’s potential windfall. Another says that signs recognizing the city’s contribution must be erected at any “public amenity project” in the park.
The sales tax money diverted to the park will be administered by a four-member board consisting of the council president, the park’s CEO, the president of the park’s board of commissioners and the secretary of the state Department of Culture, Recreation and Tourism.
The park’s master plan, adopted five months before the storm, spelled out a $115 million vision for reshaping the long-bedraggled park in time for New Orleans’ tricentennial celebration in 2018.
While restoring battered infrastructure has been park officials’ top priority since Katrina, they also are making strides in shoring up an operating budget they have long known was inadequate.
Unlike most large urban parks, City Park’s annual operating budget receives no property tax revenue and no allocation from City Hall. Virtually all of the park’s operating revenue is self-generated, coming from fees and private donations.
Before Katrina, the lone government subsidy was a $200,000 annual appropriation from the state. Last year, the Legislature increased that contribution to $2.5 million and agreed to give the park a percentage of the Fair Grounds’ slot machine receipts, a source that could generate $2 million a year.
With the extra money, the park has been able to boost its full- and part-time staff to about 100 — up from two dozen or so workers after the storm — but still far short of the 260 on the payroll in the summer of 2005.
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