(C) Verite News New Orleans This story was originally published by Verite News New Orleans and is unaltered. . . . . . . . . . . Explainer: What’s going on with the River District? [1] ['Josie Abugov', 'More Josie Abugov', 'Verite News', '.Wp-Block-Co-Authors-Plus-Coauthors.Is-Layout-Flow', 'Class', 'Wp-Block-Co-Authors-Plus', 'Display Inline', '.Wp-Block-Co-Authors-Plus-Avatar', 'Where Img', 'Height Auto Max-Width'] Date: 2024-05-21 Originally published Feb. 7, 2024 Updated on May 21, 2024 If you’ve been following New Orleans politics or business news recently, you’ve likely heard about the River District. Located on around 40 acres of riverfront land surrounding the Ernest N. Morial Convention Center, the soon-to-be neighborhood is a $1 billion project in the making by a group of private developers and Convention Center officials. Construction officially began in late November. The developers — called the River District Neighborhood Investors, or RDNI — are planning a new residential and commercial neighborhood that will include housing, office spaces, and commercial businesses, such as a hotel and restaurant. Proponents of the development have touted affordable housing as one of their main goals for the multi-purpose project. But there’s also been a lot of drama surrounding the River District. City and state officials have bickered over the legality of a 15-year tax break. Developers passed an agreement without the knowledge of the New Orleans City Council. A clash between Topgolf, one of the district’s key tenants, and a competing golf entertainment complex has been marked by lawsuits. Between the legal terms, moving parts, and politics surrounding the River District, understanding what’s going on can be difficult. But the development has big stakes for the city and its residents on bread-and-butter issues like housing and education. Verite News spoke with local experts to break down some of the key issues of the River District saga. Catch me up. What is the drama about? In December, the City Council authorized a 15-year property tax break known as a PILOT to benefit oil giant Shell, which is moving its regional headquarters from the Central Business District to the River District. The River District and the council got pushback from the Shell deal on both moral and legal grounds. Some argued that the deal violated a provision of state law because the council approved it too quickly. City council members and state lawmakers hashed it out. The Louisiana attorney general weighed in. Environmental rights organizations and activists also opposed the tax break, arguing the global oil company should not be off the hook when it comes to taxes. Separately, city council members were cut out of an agreement in December that governs taxation and tax exemption policies within the development. Some council members told Verite News they only learned of that deal after a reporter reached out to them, a month after it was approved. Months later, the Council voted in May to enter into the agreement with developers. Under the amended agreement, the Council can levy and collect sales and hotel taxes in the new neighborhood. The development has also been ensnared in lawsuits. The Louisiana Bucket Brigade, a nonprofit that aims to support communities harmed by the petrochemical industry, sued the developers and the city in January for their handling of the Shell tax break and the governing agreement. Two other suits have revolved around Topgolf, one of the other planned facilities within the development, and its rivalry with a similar golf entertainment venue under construction nearby. What even is a PILOT? How does this one affect jobs or education? PILOT is an acronym for payment-in-lieu-of-taxes, an economic incentive agreement where a government accepts a lump sum instead of regular property taxes from entities that promise other economic benefits to the local community. Private companies like RDNI often argue that the economic growth their projects will bring in is worth more than the property taxes they would otherwise pay: creating new jobs and holding onto current ones, eradicating blight, attracting new businesses and retaining businesses that may be looking to leave. For example, the New Orleans Industrial Development Board approved a PILOT for the restoration of the Hyatt Hotel following Hurricane Katrina. In 2016, the public board approved a PILOT for the construction of a movie studio in New Orleans East. Proponents of the PILOT say the benefits of the Shell building will far outweigh the estimated $21.6 million loss in property taxes for the city over the course of the next 15 years. According to a Nov. 21 presentation in front of the City Council, the economic impact of the Shell building would be $412.4 million annually, with a total of $127.8 million through household earnings and salaries of the workers employed by the company. These jobs would spur tax revenue estimated at $25.9 million over the next twenty years, which would in turn benefit the city. Critics of the tax break are skeptical of this math, pointing out that the oil giant is simply moving its headquarters less than a mile and a half from its current downtown location. In presenting the PILOT proposal to the council, Jeffrey Schwartz, the director of the city’s Office of Economic Development, said that Shell planned to retain 1,000 workers and increase its workforce by 20 to 30 people per year. Shell itself has since undermined that argument. The company has said it had never planned to move its downtown office out of New Orleans. Shell now plans to relocate 819 workers currently employed in the Hancock Whitney building to the River District but is not planning on adding new jobs. The Orleans Parish School Board has also voiced opposition to the Shell tax break. As a major recipient of property taxes within the city, the school board would normally benefit from property taxes generated by the large office building. “Given the Council’s action exempts developers from paying property taxes for the first fifteen years, we believe careful consideration and an opportunity for stakeholder engagement is required,” a Dec. 12 letter signed by all members of the School Board read. Anne Rolfes, director of the Louisiana Bucket Brigade, similarly said that the needs of the School Board should be a top local priority, noting that only about 34 percent of New Orleans third graders are reading at grade level. “If we’re considering the schoolchildren and families of New Orleans and our needs versus the needs of a foreign oil company, which way are we going to go? I believe with the families of New Orleans every time,” Rolfes said. PILOTs are relatively rare in New Orleans, noted David Wolf, counsel for the Industrial Development Board, the public board that often approves such agreements in the city. When a private entity like RDNI is seeking such an economic incentive for a project, the company will hand over ownership of the property to a public entity, like the Industrial Development Board, since public entities do not pay property taxes. Typically, the private company then hands over a set amount of money at a dollar amount less than the property taxes it would have owed, Wolf said. But RDNI does not have to pay anything in exchange for the tax exemption because the vacant land is already owned by the Convention Center, a public entity. In this case, the exemption will apply to the building on the land. As for that, the PILOT agreement stipulates that RDNI “shall make an annual payment in lieu of tax equal to $0.” William Most, an attorney representing the Bucket Brigade, said he has never seen an agreement where the payment in exchange for property taxes is zero dollars. “It really calls into question whether the agreement can truthfully be called a PILOT agreement at all,” he said. Why does this matter for affordable housing? River District backers have touted the project as a boon for affordable housing in the city. While RDNI says affordable housing is one of its top priorities within the development, some housing experts are critical of how the financing of the project will actually translate into ameliorating the city’s housing crisis. Under the master development agreement originally approved by the Convention Center’s governing board in 2022, RDNI agreed to build 450 units of affordable and workforce housing, out of what was originally planned to be about total 1,100 housing units. The developers have since announced plans to reduce the total housing units to about 900 but still plan on making 450 of them below-market rate. This figure exceeds the city’s zoning requirements, which stipulates that 10% of rental units be allocated for below-market housing. According to city zoning rules, “affordable housing” is defined as housing that is affordable to renters making up to 60% of the area median income — or an income of about $49,000 for a four-person family in New Orleans. And workforce housing are units that are affordable for families making between 61% to 120% of the median income in the area, based on the master development agreement. Measures for affordable housing are noted in state and local laws governing the River District. The state law that gives the City Council the authority to approve PILOTs in the development includes a provision that each economic development project must create 75 affordable or workforce housing units. The initial taxation agreement that was inked without council approval also calls for 98% of any savings connected to the PILOT must be dedicated to affordable housing. The amended agreement, which includes the Council, raises the minimum amount of sales taxes set aside for affordable housing, from 10% in the initial agreement to 50%. River District officials are also required to complete the initial phase of affordable housing development within four years. Andreanecia Morris, the executive director of HousingNOLA, told Verite News in February 2024 she was skeptical about the tangible impacts of the original provisions. According to the developers, the district would net about $5 million in savings connected to the PILOT, money that would largely be set aside for affordable units under the cooperative endeavor agreement. But the developers estimate they still need another $45 million to build 300 units of affordable housing. Some housing advocates have said that any additional funding towards affordable housing makes a difference. But for Morris, these relatively small dollar amounts are not enough. “We can’t keep doing trickle-down economics,” she said. “That’s what this is.” HousingNOLA was an initial supporter of the River District because of its affordable housing commitments, but the organization withdrew its support last year. As the project continues, Morris said she’d like to see “real assurances” on housing that include legal penalties if the developers don’t deliver on their stated commitments. Why do environmental groups care? And pro-Palestinian activists? Critics of the River District have criticized the Shell tax break on both procedural and ethical grounds. While the Louisiana Bucket Brigade is suing the city and the developers over alleged legal mishandling of the tax exemption, the organization says it is working on behalf of communities impacted by the oil industry in Louisiana. “Shell has ravaged our coast and polluted communities throughout Louisiana,” Rolfes said in a press release, describing the oil giant as one of the “most destructive petrochemical companies” in the state. Pro-Palestinian groups have also protested the Shell PILOT. The oil company has seen its share prices rise since the beginning of the Israel-Hamas war. At a January City Council meeting, protesters with organizations including New Orleans for Palestine and Jewish Voice for Peace voiced their opposition to the tax break, chanting“money for housing, not genocidal Shell” while waving posters about Gaza and the River District. “Shell Oil profits from wars, including the genocide in Gaza, and from the destruction of the environment and communities across the state of Louisiana,” organizers with Louisiana for Palestine said in a news release. I’ve read this explainer and I have something to say. What should I do? Amid the ongoing controversies around the passage of the Shell tax break and the local agreement that cut out the city, Councilmembers Helena Moreno and JP Morrell announced that they will be introducing new legislation to improve transparency for economic development incentives. “The public should never have to play catch-up on multimillion dollar projects that will impact the city for decades to come,” Morrell said in a Feb. 1 news release. “Economic development projects that receive tax incentives must receive scrutiny and transparency so that the public can be informed and engaged.” Anyone interested in following the public process can attend City Council meetings, view them live or subsequently on YouTube, and submit a virtual or in-person public comment. Residents can also attend community meetings hosted by the developers (sign up to receive meeting notifications here). The Lower Garden District Association has also hosted a series of town hall meetings pertaining to River District developments and the Topgolf facility. The neighborhood organization holds monthly board meetings open to the public on the third Monday of every month at Felicity Church on 1220 Felicity St. Interested residents can also contact the organization for regular updates. Correction: An earlier version of this article misspelled the name of the counsel for the New Orleans Industrial Development Board. He is David Wolf, not Wolfe. The error has been corrected. Related Republish This Story Republish our articles for free, online or in print, under a Creative Commons license. 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