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A vote for would
Give New Orleans the ability to create a residential property tax exemption for affordable housing developments.
Property tax exemptions are listed in the state Constitution. Additional exemptions cannot be added by state law or local ordinance. Property taxes are a major source of revenue for local governments. Usually local governments have no control over what is exempted from property tax, because those rules are in the Constitution and new exemptions are initiated by the state Legislature. A shortage of affordable housing is a problem in many urban areas, particularly New Orleans.
The amendment would grant the City of New Orleans the ability to establish property tax exemptions for residential properties that provide affordable housing. Developments over 15 units and short-term rental properties, such as for Airbnb lodging, would be ineligible. The tax assessments could be fully or partially exempted. Properties could be upgraded without being taxed for the added value. Depending on how the city structures the program, the target could be owner-occupied homes, with the exemption applying directly to the homeowner, or rental homes or apartments with the tax break going to the landlord or developer in exchange for affordable rents. New Orleans would create the rules and process for the program, which could vary greatly depending on how it is constructed. The precise definition of “affordable” housing would be left to the city to decide.
Companion legislation requires proposed rules to be published 30 days before becoming effective with at least one public hearing during that period. The exemption would apply to all property taxes collected including resources that otherwise would flow to the sheriff, parks, libraries and schools. To take effect, the proposed amendment would have to be approved by a majority of the voters in Orleans Parish as well as statewide. New Orleans would be required to absorb any decreases in specific ad valorem tax collections as a result of this new authority.
Giving local government another tool to handle local issues such as affordable housing only makes sense. There is a genuine need for more affordable housing in New Orleans. The proposal is an attempt to help longtime residents remain in the city, to attract new residents and also to reduce blight. Because property taxes finance local government, the decision on what to exempt should be made at the local level. This amendment avoids the problem of past attempted changes to the Constitution that would have added narrowly defined programs. This proposal gives New Orleans flexibility to make future adjustments without the need for further constitutional amendments to refine the program. If properly implemented with clear criteria and accountability mechanisms, this New Orleans program could become a model for other local governments. The real net cost to the city’s coffers should be marginal, assuming the incentive is effective. New Orleans may draw on the experience of other cities around the country that have similar programs.
This amendment could diminish a critical and evolving revenue base for New Orleans at a time when a disproportionate amount of city property is exempted already. Low-priced owner-occupied homes already benefit from the $75,000 homestead exemption. Several state and federal programs exist to address urban housing problems. The definition of “affordable” could be made so broad that the program could give a tax break to developers more so than to actual home dwellers. And the projects might happen anyway without this incentive. Citizens in the program would be less invested in their communities and insensitive to the impact of higher tax millage proposals burdening other property owners in the future. New Orleans already swells with tax exempt government buildings as well as properties owned by non-profits and religious institutions, which sometimes operate commercial-style facilities. The pressure to raise taxes would increase with this program. All in all, this amendment could turn into a costly proposition with high risk for abuse and favoritism. Creating this new authority only for New Orleans would require further need for constitutional amendments should other parishes or municipalities wish to have the same authority.
Legal Citation: Act 448 (Senate Bill 79 by Sen. Carter) of the 2019 Regular Session adding Article VII, Section 21 (O). Companion legislation Act 407 (Senate Bill 80 by Sen. Carter) enacting R.S. 47:1716.
The Public Affairs Research Council of Louisiana (PAR) is an independent voice, offering solutions to public issues in Louisiana through accurate, objective research and focusing public attention on those solutions. PAR is a private, nonprofit research organization founded in 1950 and supported by membership contributions, foundation and corporate grants and special events.
For more information, media interviews or public presentation requests regarding this constitutional amendment guide, please contact PAR President Robert Travis Scott at RobertScott@parlouisiana.org.