If we’ve learned one thing during the debate over the use of tax increment financing for a pair of hotel projects along commercial-rich Bluebonnet Boulevard it is this: The diversion of project-generated tax revenue to cover private-sector debt is no longer about bringing abandoned or impoverished areas back to life—as was originally intended—rather its use in this town is almost exclusively justified in the name of economic development.
Such was the case with the TIF given by state and local officials to Bass Pro in Livingston Parish and to Cabela’s in Ascension. And now it’s why, we’re told, Mike Wampold absolutely, positively must get one to convert the half-built Jimmy Swaggart dorm into a 348-room Marriott Renaissance Hotel and Conference Center.
Even before Bass Pro, the intersection of Range Avenue and I-12 was the busiest intersection in the fastest growing parish in the state. So it seems reasonable to conclude that any number of retail and commercial projects coulda, woulda thrived quite nicely without government aid. No matter, TIF lovers said, we’re talking job-and-economic-impact behemoth Bass Pro, so anything and everything has to be done to bring this mega-box to the heart of Sportsman’s Paradise.
Consider Cabela’s, located on a site directly across the street from the busiest retail development in Ascension and one of the more profitable outlet malls in the country. Certainly there was an element of “well, Bass Pro got TIF so why not us,” but mostly it was a dazzling pile of economic impact reports.
And now we have the Marriott project, smack dab between the Mall of Louisiana and Perkins Rowe and in the middle of what we’re told is a burgeoning and soon-to-be wildly lucrative medical corridor. To be fair, there was some meager attempt to justify this latest TIF use on removing a blighted reminder of how far Rev. Swaggart’s fortunes have fallen, but mostly what we’re hearing from supporters is a steady stream of quotes from a report by economist Loren Scott citing the tremendous number of temporary and full-time jobs the project will create.
Of course, Wampold cruising toward TIF approval was enough to get developer Tommy Spinosa to lift his head above a mounting pile of federal and state lawsuits long enough to request similar financing for a limited-service Hilton he’s planning for Perkins Rowe.
And that, as one might expect, was enough for two other hotel developers to rush to the Capitol and frantically try to attach TIF to a proposed hotel project at the nearby Grove development. [At this point, it looks like they and any other hotel developer will have to wait until next year to belly up to the TIF bar.]
This, for those keeping score at home, comes on the heels of the downtown Capitol House [which deserved it] and King Hotel [which did not] earning TIF status.
So it’s clear to me that hotels have replaced call centers as Baton Rouge’s economic development go-to industry.
Yet for how long? There are currently 9,167 hotel rooms open for business in the Baton Rouge area, including 1,000 rooms that have come online in the past two years. On top of that, there are another 1,000 under construction or in final planning, another 2,000 in the planning or pre-planning phase [including Spinosa’s but not Wampold’s] and at least six other hotel deals in the works, including two downtown should Kip Holden ever get his billion-dollar bond issue passed.
The building boom in the name of economic development comes at a time when both area hotel occupancy rates [-5.9%] and revenue per available room [-7.3%] are down. Obviously the national recession is partially responsible, but even in good times is adding 4,000 to 5,000 new hotel rooms a smart investment? Experts tell me consistent occupancy levels below 60% indicate an over-built market. Currently the Baton Rouge area is running at 62.4%. It’s against this backdrop that our state and local government is deciding to invest tens of millions of dollars in hotel projects?
Some argue the tax diversion is no big deal since it’s revenue not currently being collected. That’s only true if you assume no existing hotel in the market could serve the customer. Otherwise you’re simply transferring the tax revenue from government to the private debt holders.
Question: Should the hotel market one day crash under the weight of all these new projects, will the Baton Rouge legislative delegation—which today is fighting so hard for TIF-backed hotels—be there arguing to tap the state’s megafund to save any troubled hotel built with traditional financing?
More important, what does it say about Louisiana when chicken plants and hotels are such high economic development priorities?
