Focus Must Shift from Visitors to Residents if NOLA is Going to Reach Fullest Potential
The New Orleans Ernest N. Morial Convention Center appears set to move forward with its $557 million expansion plan that will include a hotel that connects to the convention center along with condos, restaurants, retail shops, dining and entertainment options for tourists to enjoy.
The Convention Center is even advertising a new campaign touting the project and using an old, tired, but catchy phrase—“When We Build It…They Will Come.”
We have no doubt about that. Our city is rich with culture and history. It attracts numerous visitors from across the globe annually. Last year records were set—nearly 11 million people came and left more than $7.5 billion here—and that was without a fancy new hotel with a skywalk that connects to the convention center.
So when proponents of the plan say that it will bring thousands of new visitors to New Orleans because as their slogan suggests, when they build it the people will come, we absolutely believe them.
The questions we ponder here are meant to provoke a serious conversation about the type of city we are and the one we want to be. So, if it’s true that when “we” build it, they will come, we have to wonder if they know where they are coming? Are they aware of the deep challenges our city faces? And can we really handle any more of them?
Can our roads handle any more cars? Can our outdated and archaic water and sewerage system handle any more users? Can we afford to keep making New Orleans a wonderful place to visit, while neglecting to improve its position as a great place to live? And why aren’t we focused on building a better city, with better infrastructure and higher wages, affordable housing and increased economic opportunities for those who call New Orleans home. We wonder what would happen if we built that?
Let’s consider the last five months alone:
• On May 22, a precautionary boil water advisory had to be issued for Venetian Isles.
• On June 28, steam pressure at the Carrollton Power Plant dropped and led to a turbine, that was built in 1909, shutting down, which caused a drop in water pressure on the East Bank. Because the drop in water pressure never reached below 15 pounds per square inch (15 psi), a precautionary boil water advisory was not issued. But how many close calls have there been? Oddly enough, shortly after this incident, the Louisiana Department of Health raised the minimum threshold for a public water system from 15 psi to 20.
• On Sept. 22, a boil water advisory was issued for Lower 9th Ward residents after a momentary loss of water pressure at the Carrollton plant.
• On Oct. 19, Lower 9th Ward residents had to deal with another boil water advisory after one water pump was taken off line and a another put on at the Carrollton Water Plant
• On Oct. 20, a boil-water advisory was issued for all residents east of Franklin Avenue, which included the Upper 9th Ward, the Lower 9th Ward and New Orleans East after a voltage spike at the Carrollton Plan resulted in a loss of power to the water distribution system.
That’s five boil-water advisories in five months. During any boil-water advisory, residents and visitors should not drink or brush their teeth with tap water. With that, we suppose it is a good thing that these advisories rarely impact the CBD, the French Quarter and city’s major hotel district downtown or else hoteliers would have to start giving away those $2 bottles of water on the regular so guests can practice good oral hygiene.
Meanwhile, the convention center hotel expansion as proposed by big-time, wealthy developers is projected to cost the city and its people hundreds of millions in uncollected sales and occupancy taxes over the life of the hotel, not to mention a $40 million subsidy that will go directly from the Convention Center to the hotel’s developers.
This summer, Mayor LaToya Cantrell came out against the plan. Her chief concern is that between the cash subsidy and the sales tax waivers, the city of New Orleans would be missing out on lots of money—money that it sorely needs to address infrastructure and quality of life issues that impact the people that call New Orleans home. Money that could be used to replace turbines and water pumps or whatever in the world needs replacing so that the residents of this city don’t have to boil water before they use it.
Mayor Cantrell said that she simply couldn’t bring herself to support any development plan that would take money out of the city’s coffers; and we agreed.
In fact, during our recent interview with her on the 2019 budget, she brought the conversation back to the city’s infrastructure challenges and how the hospitality industry will need to do its part in helping make New Orleans a better city for all.
“We have $50 million to $80 million of drainage work that needs to be done,” she says. “And we can’t tax our way out of it. It does us no good to have hotel rooms full of visitors and they can’t flush the toilets.”
That’s why we were all on board with the Mayor several weeks ago when she proposed a plan that would call on major tourism and sports industry players—the Ernest N. Morial Exhibition Hall Authority, the Louisiana Stadium and Exposition District, the New Orleans Tourism Marketing Corporation and New Orleans & Co., formerly known as the Convention and Visitors Bureau, which share in the pot of revenue generated from the hotel taxes the city collects—to allow the city to divert some of that money to addressing infrastructure needs.
Mayor Cantrell says she has received positive feedback from local tourism industry leaders.
Of course, the plan would still have to be approved at the state level by the legislature. Unfortunately, Governor John Bel Edwards recently reportedly came out against Mayor Cantrell’s proposal. The way he sees it, New Orleans and Louisiana have the Super Bowl coming up in 2024 and all of the funds used by those organizations to improve their facilities and promote the city are needed to prepare for and welcome football fans to the sport’s biggest event of the year. Plus, the dollars that would be diverted from the tourism and sports industries would not be enough to address the city’s infrastructure challenge.
And all we can say to the Governor is “WOW!” What about the idea of every little bit helping or having to start somewhere? What about the fact that New Orleanians have had to deal with boil water advisories on a monthly basis. And why is our governor more concerned about a football game that is taking place six years from now than he is with the people that elected him? By the way Governor Edwards, if it is such an insignificant amount of money, then the Exhibition Hall authority and the Stadium District won’t miss it. And if they, along with New Orleans & Co and NOTMC, are open to considering the idea, why are you so willing to shut it down?
By the way, we say $40 million is a great place to start. We say that instead of the convention center giving a rich private developer $40 million, how about passing those bucks on to the city to address water and drainage issues.
Meanwhile, developers tout the 1900 additional jobs the hotel and ancillary shops and restaurants will generate, while conveniently forgetting to mention that many of these jobs will likely hover somewhere near the federal minimum wage of $7.25 in a city and state where wages have failed to keep up with the cost of living.
It is hardly lost on us that many of the folk earning low wages in the hospitality industry are the same folk that are housing-cost burdened and the same ones living in the wrong part of town every time there is a boil-water advisory.
Time to Rethink the Whole Thing
But then we really got to thinking. How is it that the New Orleans Convention Center is so flush with so much cash that it is able and willing to fork up $40 million to a private developer for a project that is ultimately designed to enrich the developer?
In recent years, the hotel tax has generated more than $150 million in revenue that primarily goes to the tourism related entities.
Last year, the Ernest N. Morial Exhibition Hall Authority received more than $47 million of it.
The Stadium District, the entity that runs the Superdome, collected more than $50 million. The question is why?
These massive contributions to the convention center or the Superdome’s governing entities from the hotel tax revenue may have made sense in the early stages of growth and development of their facilities. But why are they still allowed to collect tens of millions each year when their facilities have been completed and even after they have undergone subsequent renovations, upgrades and expansions, especially while New Orleanians have to boil water because 110-year-old turbines keep failing? That is the question.
We just can’t believe that this is what leaders and voters had in mind when the hotel tax was approved—a never ending supply of money for industry insiders and the well-connected to use while the people of New Orleans make do with cake crumbs.
The city’s share of the hotel tax money from 2017 was $18 million.
According to a BGR report, about 75 percent of the hotel tax money goes back to the tourism industry. Meanwhile, the city’s cut for a record-setting year of 2017 was only about 12 percent of that money, which goes into the general budget for things like fire protection, police, roads, and other infrastructure needs. But our city needs more.
There are other cities that do this differently.
Sixty years ago, when the city of San Diego set up its hotel tax, called the Transient Occupancy tax, it was designed—much in the same as our hotel tax—to create funds to market the city as a tourism destination. But when the city experienced some budget woes, those funds were diverted to pay for street repairs, police and fire protection, public parks, infrastructure needs and even public library services. Money from San Diego’s TOT is still used that way today. In fact, by 2007, only about 6 percent of TOT revenue was used to market the city.
And while the city now levies another smaller, tiered occupancy tax that directly funds tourism marketing and growth efforts, the bulk of the San Diego TOT, which generated $289 million in 2017, went to general fund to improve quality of life for San Diego residents, which by the way also makes the city more appealing to visitors. Tourism is San Diego’s third largest industry, attracting 34 million visitors annually and is the 11th most visited American city by travelers from overseas.
It seems that San Diego’s residents and tourism industry leaders understand that
New Orleans’ tourism industry has grown significantly over the last 30 years. While there is still need to promote the city and maintain facilities, should New Orleans really be forking over the lion’s share of hotel tax revenue to the tourism industry when its infrastructure needs are as great as they are?
