Jun 232014

Owen Courreges

Nobody will ever accuse Mayor Mitch Landrieu of being creative.  Time and time again he has traveled down the same well-worn path of shifting blame to justify pursuing unpopular fiscal policies.

Most recently, Landrieu did the ol’ bait and switch by proposing cigarette and hotel tax increases that he knew he lacked the clout to get through the legislature.  Next, he turned around and pushed through authorization to double of the police and fire property tax millages, subject to approval of that proposal on the city and state ballots in the fall.

And of course, this sleight of hand comes on the heels of Mayor Landrieu’s attempt to shift blame for the city’s fiscal woes resulting from the two consent decrees over the police and conditions at Orleans Parish Prison to the federal government and Sheriff Gusman, respectively.  At that time, Mayor Landrieu effectively denied blame for his own lack of planning by waging a half-hearted legal battle against the consent decree for the NOPD (which he had previously agreed to).

With Landrieu, the buck always stops somewhere else.  He’s like Mayor McCheese, who consistently blames the Hamburgler for all the problems in McDonaldland instead of his incompetent “cheese-based” fiscal policy (OK, I may have made that up).  The bottom line is that Landrieu wants us to believe that he’s been backed into a corner and has no choice but to push through a major tax increase.  It’s simply not true.

Have you ever wondered exactly what percentage of property value is actually generating property taxes?  The Bureau of Governmental Research asked that question in 1996 and found that roughly two-thirds of property value in New Orleans was off the tax rolls entirely.  About half of this value involved property owned by government entities, while the remainder was split between the homestead exemption and the nonprofit exemption.

The BGR focused on the nonprofit exemption as a source of major problems.  It is broadly accepted that properties owned by a nonprofit for its core mission – such as an active church facility or school – should be tax exempt.

Alas, as we all know, nonprofits are notorious for owning vacant, blighted buildings, or for owning properties that are managed to generate revenue (i.e., a paid parking lot open to the public). The properties in the latter category still normally receive the nonprofit exemption even if they don’t actually deserve it.

Moreover, the nonprofit exemption is unlike the homestead exemption in that it is a total exemption.  The homestead exemption is a partial exemption: it only goes up to the first $75,000 in the value of a primary residence, and it does not apply to the fire and police millages – exactly the same millages that Mayor Landrieu wants to double.

With nonprofits, there is no limit on the exemption.  It applies to all property taxes at all levels.  It’s a sweet exemption, at least if you qualify.

In 2011, the BGR decided to take a second look at the issue to see if progress had been made.  It found that in terms of raw numbers, there was superficial progress.  Instead of two-thirds of property value being off the books, it was now 43%.  Alas, the BGR did not attribute this to significant progress in bringing nonprofits back on the tax rolls; rather, the problem appeared to be that nonprofits were not being properly reassessed, so their hideously outdated values were gradually eclipsed as the assessments of taxable properties rose.

To wit, the assessed value of taxable properties rose 146% between 1996 and 2010, while the value of nonprofit exemption properties dropped by 20%, and the number of nonprofit exempt properties rose by 60%.  Clearly, the problem has never improved.  The tax rolls, at least with regard to nonprofits, are an elaborate fiction of such unrestrained fantasy as to make Lewis Carroll blush.

For example, you know what the assessment of Loyola University is? Zero. Nada. Paradoxically, if you write out a check for “nothing” and demand to buy Loyola lock, stock, and barrel, they’ll turn you down.  You’ll be lucky if the campus police don’t rough you up while delivering the bum’s rush.

Thankfully, we don’t need radical reform to cure this problem.  All we need is a clear law providing that the nonprofit exemption only applies to properties owned and used by the nonprofit itself for purposes related to its mission.  A nonprofit simply owning property should not render that property tax exempt.  Surely, such a shift in policy could generate sufficient funds to cure our budgetary woes.

Regrettably, although this is a major problem, Mayor Landrieu has seen fit to ignore it.  [Correction: A reader has pointed out that Mayor Landrieu actually did address the BGR report and proposed reforms to the nonprofit exemption in 2011. However, soon after Landrieu tabled those amendments and has not, to my knowledge, ever addressed them again.]

Landrieu could have started lobbying years ago to reform state law regarding the nonprofit exemption (at least as it is applied to Orleans Parish) in order to generate more revenue. Landrieu could have also instituted more severe spending cuts, particularly to his own bloated office. He did not.

Instead, Landrieu has kicked the can down the road and left the city on the brink of financial ruin.  Now, he is proposing that the consequences of his lack of creativity and foresight be placed on the shoulders of New Orleans taxpayers.  To that proposal, I say we reply with a resounding “no.”

Owen Courrèges, a New Orleans attorney and resident of the Garden District, offers his opinions for UptownMessenger.com on Mondays. He has previously written for the Reason Public Policy Foundation.

  32 Responses to “Owen Courreges: Mayor Landrieu should tax more properties, instead of taxing us more”

  1. he did. it was a bit of a dog and pony show and i don’t remember if they actually ever got a legislator to carry any of these into baton rouge. even a dog and pony show is more than the nothing you give him credit for. see tax fairness commission recommendations from i wanna say 2011 http://www.bgr.org/files/general/TFC_Final_Recommendations.pdf

    • Devin,

      Fair enough, but the entire issue ended with the proposal by the tax fairness commission which was — as you point out — a dog and pony show. To my knowledge, Landrieu hasn’t done anything to push this issue directly, and instead opted for pushing major tax increases. It makes me seriously question whether he ever considered “tax fairness” to be any kind of priority.

      The only record I can find of anything Landrieu did on the issue is that he tabled any proposed amendments several months later, and never brought them up again.


      Landrieu made several proposals with the state legislature regarding taxes this session, including two that were doomed to failure (hotel and cigarette taxes), but none of them involved the nonprofit exemption. It seems to me that he either never wanted the nonprofit exemption reformed, or that he wasn’t willing to put the political muscle into the issue.

  2. Thank you for another interesting article. If the Jesuits own income producing property and somehow are not required to pay rent, it smells like the city is run by fools that somehow think that is fair to us, the taxpayers . Government should not be in the business of respecting religion (establishment clause) and all exemptions to religious owned property seem to be unconstitutional. Thousands of us for am in favor of the removal of all exemptions to church owned property. If they refuse to pay for police and fire through fairly established taxes, they should hire their own guards and in case of a fire, pray for rain!

  3. I am with you on this, Owen. No raises in property taxes for we the over-taxed citizens of the city. Those of us, that is, who actually pay property taxes. And while we are for some change, get rid of all Landrieu’s pompous staff of deputy mayors. Think of how much that would save the city. But then who would make the day to day decisions of how to run the city? Certainly not our illustrious mayor.

  4. Tulane pays ZERO…We need to stand up to JUST SAY NO
    i am alarmed at how the home owners will do nothing about this!!

  5. Example: The Nrwegian Church operates a 12 room hotel (for TOURISTS, not clergy or seamen, their original mission, long since obsolete) for which it neither collects nor remits hotel sales and/or property taxes.

    • Joanne,
      That’s exactly the sort of thing that shouldn’t be allowed. I understand that nonprofits may use these side businesses to generate revenue, but those businesses should be taxed like any other, including relative to property taxes. Surely we could make major headway closing the budget gap if these properties were properly taxed.

    • leave the Norwegians alone, please — they do have
      interesting people there — does not hurt NOLA a bit in fact it is good for it …. my opinion

    • I will have to look into this – as a Norwegian (a Grimland) I am just trying to stand up for my people – it never occurred to me that the NSC could be doing anything that is not legal — I will research this – and thank you for your observations and I hope they are not going to be as bad as noted …. as I said I find this disgusting – we have so many problems in New Orleans that are much more important to focus on than the Norwegians – BUT IF THEY ARE WRONG ON BREAKING THE LAW I WILL DO SOMETHING ABOUT IT….

  6. I am on board with this 100%. Landrieu should take a good hard look at whoever is assessing values of individual properties as well. Several commercial properties are grossly undertaxed and then you’ve got the “blanket assessments” which end up overvaluing other properties (i.e. businesses on North Rampart being valued the same as ones nearby in the quarter). Competency in the assessor’s office would help more than most realize.

    Penalizing nonprofits for dilapidated, blighted properties would also help tremendously in eliminating blight as well as generating income

    • Uptowner,

      Of course, some of this is out of Landrieu’s hands — he doesn’t control the assessor’s office, for example. However, his abortive, half-hearted attempt at “tax fairness” which he quickly abandoned justifiably raises questions about his commitment to reforming a broken system. As I said in another comment, either Landrieu never really supported reform, or he simply didn’t want to commit the time and effort to reform.

      I’m glad you raised the issue of blighted properties. I understand there are some political barriers in the state legislature, but could Landrieu really not have at least secured legislation allowing him to tax unoccupied and blighted properties owned by nonprofits? At the very least that would help bring properties back into commerce, even if it wouldn’t generate a great deal of revenue. There just seems to have been a total lack of political will.

  7. Someone needs to start a website in which citizens can report properties which are improperly assessed, e.g., drew brees house still assessed at purchase price even though renovation occurred which substantially increased living space. Maybe the assessor could set up one.

    See http://qpublic9.qpublic.net/la_orleans_display.php?KEY=576-AUDUBONST

  8. Owen, you are spot on. The way some churches are abusing this is a sin. But you’ve missed one other angle on this. This real estate surge. When the next round of assessments hits in a little more than a year, look for the tax receipts from properties around town to increase considerably, with many being lifted above the homestead exemption. Between the pending tax hike and the increased tax base, City Hall of 2020 might be quite rich.

  9. What about the hundreds of millions of dollars of real estate the New Orleans City government is sitting on that should be sold off? The WTC, Iberville Projects, St. Roch Market, huge parking lots around the FQ and CBD. Sell those off first before you consider raising taxes. Mitch has been in over 4 years it’s embarrassing the city is holding on to this blight.

    • Those would be windfalls, and not sustainable revenue streams. It’s not the same as getting a tax increase or changing property tax laws which would provide monies on a regular basis. Besides, the St. Roch Market is set to re-open soon, so that will be bringing in rent. The WTC building is in negotiations to be rented and renovated to become a hotel.

  10. This should take care of itself as property values rise and IF assessors would do their job. But that’s the nut of it – assessors don’t get re-elected by raising property values. And when they do, people complain to high heaven.
    Not for profits should be taxed on enterprises that have nothing to do with their core mission. Loyola gets a lot of land donations through wills, and they should dispose of that property within a reasonable time or be taxed on it if not put into use toward their mission. Same with the other not for profits. But I doubt that that is significant. And if you want to tax Tulane and Loyola in general, better start taxing LSU and UNO too. Why not? Their funding comes from tuition and the state – they can budget for property taxes like anyone else. And what about Audubon? Yes, there is an irony that we pay property taxes to fund them, but, hey, pay up. Even today, there are questions about whether private inurement is going on there anyway.

    • Overbrook,

      >>But I doubt that that is significant.<<

      I actually think it's probably pretty significant. I can think of a half dozen very valuable properties nearby owned by nonprofits that are simply vacant. I know of many others throughout the city that are used to generate revenue. We'd need to run an inventory to know for certain, but I think the numbers are larger than you think.

      • Then it should be treated and taxed accordingly. I’m probably not that objective on this as I’m a big believer in property taxes and in hotel (i.e. tourist) taxes as a source of revenue, over other forms, especially general sales taxes which massacre the poor and low wage earners. (you do have to be careful with tourist taxes, however).

  11. I agree once again with you Owen. I last posted regarding rental eviction proceeding laws and this is another issue that strikes close to my wallet. I won residential properties to generate revenue for myself and get no homestead exemption on any of them. I’m paying full tax load on each and every one. I see no reason to be bilked of more of my meager profits when every single bit of property owned by the universities in this city go untaxed. It galls me to no end when I see Tulane or Loyola or for that matter any tax exempt institution take more property off the roles just by buying it. Funny how Tulane could afford to shove a new stadium down our throats in Uptown, but don’t have to pay taxes on any revenue generated by that stadium. Money Money everywhere but not a cent for taxes.
    However I suppose it is not fair to pick on Tulane since they just happen to be the biggest player in the tax exempt game. As you said, if the tax burden were spread to more of the currently sheltered entities, NOLA would be flush with cash.

  12. Thank you Mr. C- this “taxation without representation” is out of control-
    I used http://qpublic9.qpublic.net/qpmap4/map.php?county=la_orleans&layers=parcels+aerials+roads+lakes
    for these examples.
    The School is rented, but rest of the 90,000 sq-ft of land/buildings ($3,000,000+ of exempt), sits blighted for 10+ years- and with no incentives, they spend more fighting Health Clinics than being good neighbors and refuse to sell.
    4528 FRERET STREET (Public House http://www.publiqhouse.com/ occupies most) + 4605 Freret (Freret Neighborhood Center) All exempt as NEIGHBORHOOD HOUSING SERVICES valued at 1.1 million of subsidized opinions.
    and lastly
    They don’t force their politics like the others, but 4617 Freret has been boarded up for 20 (?) years!!!! No penalties or intensives to sell, so it sits as bad neighbors!!!!! so I added their $717k with others to = 4.8 million in less than 4 blocks!!!
    This taxation without representation is wrong-its time for REFORM!!!!!
    Best from 5110 Freret,
    Andy Brott

  13. why? how?
    How would it hurt them to collect and remit hotel taxes from the tourists who stay at their hotel? That’s no skin off their backs.

    • Hotel Taxes? Only fools play by the rules… https://www.airbnb.com/s/New-Orleans-Freret-?source=bb

      I found 12 in a quick search above, and there are thousands City wide. ALL ILLEGAL!!!! And to those who say “Bro-no problem dude”- “NOLA’s better for it”- I say connect the dots- it’s bad on many levels and illegal for a reason. Use airbnb.com and connect the dots you’ll see the teapot where property values have shot up the most- and wham we put tourists 1st again (+ real estate agents), and make it to expensive for a working class to thrive. + It puts more of our limited housing stock in the hands of out of state interests, who will always put tourist needs above ours, then complain NOLA has gentrified like San Fran and others…
      Sorry for the rant, but we “get the government we deserve” and we need ours to start enforcing the rules.
      Best from 5110 freret.
      Andy Brott

    • they are a church – egad – doesn’t that mean anything in New Orleans where crime and evil is evident

    • I will never stay at another Hilton —

  14. They are a church in many ways in name only, so they shouldn’t operate as a hotel under the same rules that they operate as a church. (And by the way, they are funded by the Norwegian government in addition to gifts they receive from people who can then claim those gifts as tax deductible.) Let the part that operates as a church retain all of the tax advantages of being a church; the part that operates as a hotel and competes with other businesses (which cannot receive tax deductible gifts, nor be supported by the Norwegian or any other government) should be treated like any other business and be required to collect and remit taxes. As I said earlier, since the guest pays these taxes, why is that so onerous? These are the same guests who, if staying at another establishment, would be paying the appropriate taxes.

  15. Stacey,

    That’s not entirely true. If the government sells off land, the land can then be taxed, providing additional revenue into the future.

  16. I’ve said it before and I’ll say it again — drive-by insults are stupid.

  17. I am not replying this to you personally but commenting on the effort to ruin the Norwegian Seaman’s Church –

  18. I wrote this letter to council members and the accessors office and emailed every city executive. I was thinking about revising it and re-submitting.
    Dear Council Person,
    I am 63 years old and my husband is 62. I am a part time teacher and artist. Our house taxes were late this past year due to inflation and other economic and personal factors that are universal to all at this point in our volatile economy. We always try to pay our taxes on time but as you know the taxes have to be paid in a lump sum and if this is not done you, as a representative of the city hire an outside collection firm to collect and up price the total. As I see it, is this not extortion from the city for a hire who ultimately gets the kick back? What burns me , as has been reported,is that there are some property taxes for questionable non-profits and corporate entities go years unpaid. It seems that the city is not capable of collecting these taxes. So you have honest people who try to cooperate get the brunt or the burden of the city’s lack of collection abilities. So I would advise you to consider allowing your citizens to pay-off the tax in increments with out that heavy first fine. I was in tears this past week bringing my hard earned cash to your windows to pay off our tax bill. Money, of the unfair interest incurred, that could be used to edge against an enormous personal medical emergency related bill that occurred around this time past year. There is an understanding here that U.S. cash has lost value and there is no great bang for your buck but can we not do a better job to make living in New Orleans a little bit easier for those who try to do the right thing?
    This city offers miserable living conditions with criminals that are perpetrating horrors on innocent citizens. Criminals that are allowed to run wild on the city streets with “get out of jail free passes ” from our courts. It is these said criminal courts officials who paid for extravagant meals for jurors and court other officials. As it would appear a 29$ gumbo ordered is a bit steep and perhaps reflects a favored restaurant to take advantage of a city who never WATCHES. As I now refer to the current news reporting of waste and fraud by city entities perpetrated on the backs of honest tax payers!
    So how does it feel to have heavy interest fees going to an out of state collection contractor for a burned out citizen? It was also said, “at your windows”, that the collection agency should be sending out notices and calling. Only one early notice was received by mail. Not a phone call or second and third notice received at all. So is this contractor a one time ROBO system that does no follow up? Is this why, as it has been reported, that thousands or more are owed to the city without collection enforcement.
    Yours Truly,
    A burned out citizen that believes we are moving back to the Dark Ages of history and will soon be Detroit looting the art work in the museum to pay for Criminal Court lunches.

    Sent from my iPad

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