RIDE New Orleans just launched a new petition drive aimed at the Ernest N. Morial Convention Center Authority which sued the Regional Transit Authority late last month regarding the distribution of a one penny sales tax on hotel/motel room occupancy. The Convention Center voted unanimously in May to sue the RTA. No citizen comment was allowed at the meeting where the vote was taken.
“More funding means more service,” says RIDE’s petition. “That why RIDE supports the RTA board’s push to make sure hotel/motel sales tax revenue goes where it should – to support better transit service for riders. Hospitality and tourism workers need better, more reliable service to get to the jobs that keep our town’s major industry going.”
RIDE said they were notified last month that Morial Convention Center officials had “stopped talking” to the RTA about a path forward and instead filed litigation demanding the RTA turn over money that could be used to improve bus service. “Enough is enough – the Convention Center needs to understand that they are pushing back against the will of transit riders and a majority of residents of our city.”
At the time this story was posted, approximately 100 citizens had signed the new petition. Many more signatures are expected as pressure mounts against the Convention Center. Volunteers are also needed to help with the campaign.
The battle between the RTA and the Convention Center has been brewing for decades. In 1985 Orleans Parish voters approved a one cent sales tax dedicated to transit and transit related purposes. The ballot proposition’s language included an exemption for hotel room sales.
The RTA argued in litigation filed in 1999 that the City of New Orleans should collect the taxes on behalf of the RTA since the exemption for hotels was invalid. A settlement was reached before the trial date after a coalition of hospitality organizations intervened in the lawsuit. The resulting cooperative endeavor agreement added hotel rooms to the tax’s funding base but split the proceeds between the RTA and the Convention Center.
The RTA would be able to keep 60% of the first $72. Million the tax yielded and 40% of all revenues above $7.2 million. The New Orleans Tourism Marketing Corporation (NOTMC) and the MCC would share the remaining dollars.
Under the capable direction of Sandy Shilstone, at first, and then Mark Romig, the NOTMC had been the tourism community’s highly-successful public marketing agency. In 2019 Mayor Cantrell changed the state-created agency’s direction. The tourism marketing functions were handed over to New Orleans & Company, the city’s private-non-profit tourist commission.
NOTMC then was renamed the New Orleans Tourism and Culture Fund with a new focus on the cultural economy and culture bearers. Councilmembers Jay Banks and Kristin Palmer serve on its board along with culture bearers and others with expertise in the cultural economy. The fund paid for a New Year’s Eve live national telecast and recently honored a previous commitment made to the SuperBowl Host Committee.
The 2002 Convention Center/RTA agreement was predicated in part on the Convention Center’s need to generate additional tax dollars to fund a large Phase IV expansion, which would have made the facility more competitive. Bonds were sold that were secured by the tax.
In the aftermath of Hurricane Katrina, the Convention Center cancelled their construction plans but still had accumulated debt tied to Phase IV expansion that had to be paid off. They also used RTA tax proceeds to refinance existing loans.
By 2019, RTA Chairman Flozell Daniels was re-evaluating his agency’s position and stopped making payments to the Convention Center. Daniels signaled that $62 million had been collected from the RTA’s share of the 1% hotel occupancy tax since 2001 and he wanted a portion of it back – $31,823,875.40 plus applicable interest. “This is $62 million that has been unavailable to the RTA for investments in transit services, improvements to infrastructure, amenities for our riders and the replacement of aging vehicles,” said Daniels in a letter to the Convention Center.
He continued, “For two decades our services have been impacted by limitations on financial resources, while the resources available to the tourism and hospitality marketing agencies have steadily increased. New Orleans cannot be a 21st century city without 21st century transit for its citizens – including the thousands of tourism and hospitality workers reliant on the RTA’s services. The restoration of this funding will allow the RTA the budgetary flexibility to invest in new vehicles to replace our aging fleet, to invest in innovative service solutions to areas such as New Orleans East and Algiers, to invest in service frequency increases throughout the network, all of which will benefit our local and visiting riders, employees of the hospitality industry, and every citizen of our city.” The City Council is formally supporting the RTA’s position.
Daniels further suggested that Mayor Cantrell had the legal right to arbitrate the disagreement and redirect the voter-approved funds “to the agency for which they were authorized.” The RTA and the Convention Center continued to negotiate during 2020 with the Convention Center offering a new split that would have upped the RTA’s share of tax proceeds from 50% to 75%, but no final agreement was reached.
Convention Center chairman Jerry Reyes blames the litigation on the RTA’s unwillingness to come to the table which left their agency with “no choice… but to pursue the RTA in litigation.” An RTA spokesperson said that the loss of any funding due the agency endangers transit citywide.
RIDE’s is available for signature at rideneworleans.org or by calling 345-8360 for more information.
