A bill to hand developer Mike Wampold the most generous TIF in the history of Louisiana has sailed through the Senate with nary a concern. A mirror bill in the House isn’t moving with the same speed, but political handicappers predict it will breeze to passage.
For the life of me, I can’t figure out why no one seems to give a damn that Louisiana and Baton Rouge are on the verge of handing Wampold at least $40 million in corporate welfare to build a $70 million hotel and convention complex on Bluebonnet Boulevard.
Bills by Sen. Sharon Weston Broome [SB 333] and Rep. Steve Carter [HB 877] call for the creation of a hotel taxing district that allows Wampold to use the bulk of the hotel and sales taxes generated by the project over a 40-year period to pay off any and all debts tied to converting the abandoned Jimmy Swaggart dorm into a 348-room Marriott Renaissance Hotel and Convention Center.
This isn’t the first TIF [tax incremental financing] to come down the Baton Rouge–area pike. Downtown’s Hilton Capitol Center was the first, followed by Bass Pro and Cabela’s. Last year, several vacant downtown buildings owned by Bob Dean saw their values escalate with the attachment of TIF. Developer Brace Godfrey, who needs what’s fast becoming a government bailout after paying too much to acquire the King Hotel property, got the state’s TIF blessing last year and last week got approval from the Metro Council.
There’s also a bill sitting in the Legislature that would turn most of Old South Baton Rouge into a special taxing district, allowing for the use of TIF to help rejuvenate the area between LSU and downtown. Ironically, this is the first TIF district proposal since the Capitol House that actually satisfies the spirit and intent of this government-supported financing device.
Yet what puts Wampold’s TIF in the historic category is that it will be the first to dedicate two tax streams to the payment of development-related debt. That’s right, he gets 8% or 9% [depending upon your legal interpretation] of the 13% hotel tax and he’ll get 6% of the 9% sales tax on any food or beverage sold or meeting room leased at the complex. And he keeps on collecting until the tab is paid or for 40 years—whichever comes first. Who wants to bet refinancing stretches the payment of that $70 million out over the full 40?
Assuming the project isn’t a flop and using conservative estimates, the taxing district will generate at least $1 million a year in tax revenue that will be diverted away from state and local government and into the hands of Wampold’s bondholders. Over the 40-year life of the district, that’s $40 million in government aid for what’s said to be a $70 million project.
If President Obama proposed something like this there’d be ‘round the clock coverage on Fox and folks in this right-leaning town would be hosting protest tea parties. Change the actors and give the largesse to one of our own and it makes perfect economic development sense.
Seriously, I wonder if anyone voting on these bills has actually taken the time to read them. Putting myself in their goofball shoes, I get a legislator passing up the 4% state revenue on the hotel tax because that money, save for .03% that goes to the state office of tourism, is dedicated to local entities like the Tech Park, CATS and downtown riverfront improvements. They can’t spend it so why do they care?
The state sales tax is another matter. Legislators were willing to give up just half of the state’s 4% to Bass Pro and Cabela’s, but now, during a time when revenue can’t keep pace with government’s ever-expanding appetite, they see no problem giving up the full monty to this project?
Tax incremental financing was born in this country out of a desire to 1] promote development in depressed areas or 2] make possible a project deemed essential to the community and that absolutely can’t work with traditional financing.
Whether Baton Rouge needs another hotel or convention space is debatable—and something the free market should decide. What’s certain is there’s zero justification for pumping public money into a commercial project along the highly desirable Bluebonnet corridor. Can the Baton Rouge delegation or Mayor Kip Holden [a strong supporter of the plan] look us in the eye and make a compelling case that corporate welfare is needed to make a project built between the Mall of Louisiana and Perkins Rowe viable? Really?
Maybe a hotel and convention center doesn’t work on that site with traditional financing. [There are some who question if it works even with TIF.] So who says that’s what has to go there? Should government pony up because that’s what the developer wants to build?
A TIF on this project with one revenue stream makes little sense. A TIF with both hotel and sales tax revenue makes none.
