Shoppers to pay an extra 1 percent
Over the state treasurer’s objections, officials at the State Capitol embraced the developers’ bid Thursday to charge a higher sales tax at a New Orleans shopping center.
The state Bond Commission’s approval was the final step the Magnolia Marketplace Economic Development District needed to levy an additional 1 percent sales tax at a shopping center that will be built on the former site of a public housing complex on South Claiborne Avenue in Central City.
A number of retailers — including T.J. Maxx, Ross Dress for Less, Michael’s and PetSmart — plan to lease space at the shopping center, which could open in 2015.
Shoppers will pay 10 cents in sales tax on every dollar they spend, minus a few possible exemptions. Four cents will go to the state. Five cents will go to the city, schools and the Regional Transit Authority. One cent will go to the developers for construction costs associated with public utilities, roads, elevation and drainage.
State Treasurer John Kennedy objected to the proposal Thursday, saying the shopping center will be in a distressed area. “You’re going to charge an extra penny sales tax to people who can’t afford it,” he said.
Townsend Underhill, senior vice president of development for Stirling Properties, countered that Central City shoppers have to take three buses and pay three bus fares to buy goods that will be available at the new center. In the future, he said, all they will have to pay is an extra cent in sales tax.
Stirling is one of the project’s developers.
Ultimately, the Bond Commission approved the tax hike despite Kennedy’s objections.
State Sen. Ed Murray, D-New Orleans, said the increase was necessary to attract the retailers to the city. “It really is going to do a lot for the neighborhood and the city,” he said.
Seven years ago, Kennedy objected when Stirling asked the state to surrender future sales taxes for a Target-anchored shopping center in Lafayette. Stirling wanted the tax revenue to build a service road and fill a construction hole. The center was built.
Kennedy faced off Thursday against Underhill; Jason Akers, a partner at the Foley and Judell law firm; and Aimee Quirk, economic development adviser to New Orleans Mayor Mitch Landrieu. Underhill, Akers and Quirk touted the project’s merits.
The trio’s first task was to get the project added back to the commission’s agenda. Kennedy removed it, but the developers needed to push the project through this week because of an approaching expiration date for tax credits.
Underhill said the developers need to add new infrastructure as well as relocate aging infrastructure on the site. He said developers expect to net a profit of $400,000 from annual lease payments on the retail space.
“This is not something normally that the taxpayers have to pay for. ... Why are we doing that here?” Kennedy asked, referring to the infrastructure expenses.
Akers said the development would bring business to a distressed area of New Orleans. He said it would not move forward without the sales tax increase.
Quirk said the project would generate more sales tax for the city, schools and transit authority as well as create jobs. She said nearby residents currently have to drive 9 miles to shop at retail outlets that the center will offer.
“What people want is quality retail in their neighborhoods,” she said.
Kennedy was the lone Bond Commission member to speak against the project. Once he finished his complaints, the commission acted swiftly to approve the increased sales tax.