While five of the six new economic development districts were approved by the consolidated council Tuesday, there’s still a lot of confusion about the basics. Here’s a primer to cut through the politics and help get your head around the issue itself.
What is an economic development district?
Economic development districts (EDDs) are special taxing districts created to raise money for projects thought to stimulate economic activity. Generally, a tax of some kind is levied in a limited geographic boundary, and that money is then used to pay for a variety of costs associated with public infrastructure or even private development. They can pay for roads and sidewalks, sewer pipes and pumps or help cover the cost of building a new hotel or shopping center.
So they’re like TIFs?
If you google “TIFs” then the answer is no. That’s because typically a TIF — which stands for tax increment financing — collects some portion of the incremental gain of existing property or sales taxes rather than instituting new taxes. The mechanics are otherwise pretty similar. Boundaries are created and, as tax revenue grows, it’s diverted to support development in the area. TIFs can also utilize new taxes, like these new EDDs do, but that’s not usually how they work. So are EDDs like TIFs? Sorta.
What’s the point of these new taxes?
The theory is that by leveraging public dollars to pay for development, a community can juice economic activity, like the creation of jobs and follow-on development, particularly in areas where development may not otherwise happen. Critics argue the effect isn’t to create more commerce, but to move existing commerce around. A new restaurant, hotel or shopping center will compete with those that already exist or attract customers from one end of town to another.
Where would all these EDDs be located?
Here are the proposed maps of each of the six EDDs:
- University Gateway
- Holy Rosary
- Acadiana Mall (deferred indefinitely by Councilwoman Liz Hebert)
What are the new taxes in these EDDs?
|Trappey||Downtown||University Gateway||Holy Rosary||Northway||Acadiana Mall|
|Tax||2% sales + 2% hotel||1% sales + 2% hotel||1% sales + 2% hotel||1% sales + 2% hotel||1% sales + 2% hotel||1% sales + 2% hotel|
|Term||40 years||25 years||25 years||40 years||25 years||40 years|
NOTE: Councilwoman Liz Hebert has requested that the Acadiana Mall EDD — which is in her district — be pulled from consideration so that there can be more time put into designing it.
Why isn’t a vote of the public required?
State law says EDDs can be established and new taxes implemented without an election so long as the geographic boundaries of the EDD don’t contain any registered voters. In a lot of cases, these districts are created in open fields with no people or businesses. Local governments can gerrymander maps to dodge registered voters. That’s why Downtown or University EDDs are drawn with big holes in them. It’s pretty typical of economic development districts.
Why are these EDDs so rushed?
Some of the people working on the EDDs would argue they’re not rushed, like the Downtown and University EDDs, which have been underway for the better part of a year. However, other EDDs, like Northway, Holy Rosary and the Acadiana Mall, were added much later at the request of council members who were advocating for additional investment in their districts. That said, before Tuesday’s meeting there had been no public discussions about the possibility of even considering implementing any new EDDs let alone six.
How much will these EDDs cost me?
That depends whether you shop at any of the stores or restaurants or hotels currently located in these EDDs or that get developed there in the future. Each EDD except one levies a 1% sales tax. For every $100 spent in one of those EDDs, the tax adds an extra $1. At Trappey, it’s a 2% sales tax. Proponents argue you can vote with your steering wheel. That is, if you don’t like the tax, you can choose not to shop there. Critics say shopping elsewhere isn’t a choice available to people who live in or near the districts, particularly those with high rates of residents without cars.
What will the EDDs spend public dollars on?
The primary purpose of the money collected by these EDDs is to reimburse developers, local governments or other third parties for the expenses they incur from authorized development costs. Some of these new EDDs include lists of specific expenses, like Downtown’s focus on sidewalks, drainage, sewage and parking, or Holy Rosary’s focus on a cultural museum and community health center, or the University corridor’s focus on roundabouts. But they all also include generic lists that give the EDDs broad mandates on what costs can be reimbursed (read more about that here). Given that none of these lists of authorized expenses include any budgets or any estimates of revenues that will be collected, it’s not certain how much of any particular type of development activity we should expect to actually be accomplished.
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