INEQUITABLE ASSESSMENTS: Corporate Chains Get Surprise Tax Breaks While the Community Suffers

An out-of-focus black and white photo of a brass band with the MaCCNO logo overlaid it in white. Below the logo reads “The Music & Culture Coalition of New Orleans” in white.

The City of New Orleans is culturally rich and cash poor. While this has long been the case, the economic effects of the COVID-19 pandemic and related shutdowns have made this situation even more acute, creating a $50 to $100 million revenue loss for the City of New Orleans and a near total loss of income for tens of thousands of musicians, service industry workers, and small businesses. This is a crisis, and one that is hitting the cultural community particularly hard. Of course, in a city where municipal, business, and personal financial wellbeing are largely dependent on tourism—and the nature of the pandemic makes travel particularly dangerous—virtually everyone, from global chains to grassroots pop-ups, are taking an economic hit. While the distress is universal, aid is not. Once again, the most vulnerable residents and small, local businesses are being left behind to flounder and sink while major corporations and wealthy property owners are being thrown economic lifelines.

In early October, City Assessor Erroll Williams gave a huge gift to many commercial property owners in the city, with some of the biggest beneficiaries being large corporate chains—the Sheraton, Marriott, Harrah’s, and the Hilton will all have their property assessments slashed by over $10 million each—and hotels in general will see their assessments slashed by an average of over 50%. When calculations are complete, the largest hotels will see their tax bill drop by between $1.5 and $2.5 million. While hotels may be the biggest beneficiaries, all commercial properties, from restaurants to warehouses, will see some reduction in their assessment and corresponding tax payment. Overall, this means a reduction of about $40 million in tax revenue to the city. Meanwhile, residential property taxes have risen roughly 18% over the past year, corresponding with a rise in property values throughout the pandemic. As a result, while commercial property owners will be paying less, homeowners will be paying more, and a greater portion of the burden of funding city services falls on residents. And this is all happening during a pandemic that has created massive unemployment and caused many families to struggle to pay their monthly mortgage.

 Certainly businesses, particularly locally owned small businesses and those that rely heavily on tourism, live performances, or other social gatherings are in dire need of assistance. However, these exemptions aren’t actually for businesses, but rather for the owner of the commercial property—an extremely important distinction in a majority Black city with a history of redlining, racist lending practices, and a large racial wealth gap, which have all led to large disparities in property ownership. A Black-owned business is not necessarily in a Black-owned building, and only the building owner is getting the tax break—the business still has to pay all of their taxes (and rent). Of course, for national corporations and chains, the building is likely not owned by a New Orleans resident at all, but rather a large corporation. For these properties, like the aforementioned hotels, fast food chains, and others, the money saved by lowering taxes—which previously helped fund city services—won’t benefit New Orleans at all, but will instead be siphoned up and shuffled out of state as corporate profit. It’s no surprise that global hotel chains are the biggest beneficiaries—tourism in New Orleans is an extractive industry, and this is just a new policy that further streamlines the process. According to The Advocate/, one of the people lobbying heavily for these tax breaks was Mike Sherman, former Director of Intergovernmental Affairs for Mitch Landrieu and current managing partner of Sherman Strategies, “a project-based legal consulting firm that thrives at the intersection of law, real estate, and government relations” that represents 30 hotel owners. It seems that the wealthiest corporations, who provide the least direct benefit to New Orleans, can use their considerable resources to buy direct access and have their taxes slashed, while the rest of us end up footing the bill and the long-standing inequity in New Orleans grows.

Members of the cultural community in particular are likely to find themselves on the losing end of Assessor Williams’ tax cut scheme. While business owners who are fortunate enough to own their own property will likely see some benefit, we know the majority of small cultural businesses rent their space—which means while their landlords see relief, they will not (any rent reduction will be entirely at the discretion of the property owner, and all other taxes and fees, like sales taxes, will still be due in full). Meanwhile, with residential property tax rates rising an aggregate of 18%, most homeowners and some renters will likely be paying more in 2021.

Cutting property taxes for commercial property owners—who tend to be wealthier and whiter than the general population—without a corresponding benefit for commercial tenants, while simultaneously increasing residential property taxes and rent, would be a recipe for displacement and gentrification no matter when it happened. But during a pandemic that has already created economic disaster for musicians, small businesses, artists, and other members of the cultural community, the effects could be especially devastating. Williams himself acknowledges the situation he is creating but avoids responsibility, telling The Advocate he “is not the tax collector,” even though he doesn’t “see how everybody is going to be able to pay their taxes on time.”

At the most basic level, this is an issue of equity. The decision Assessor Williams is making—whether he takes responsibility or not—is one that will make the city less equitable. The most wealthy and well-connected will benefit far more than the average resident, some of whom may now find themselves even deeper in debt. We’ve seen time and time again that trickle-down policies like these don’t benefit those most in need, and this one is no different. Of course, public policies, including tax rates, are nothing but a series of codified choices, and these choices can be reversed. There still may be a chance for that to happen here—the New Orleans City Council may have a chance to override this decision early in 2021. We need to continue to fight for a more equitable city. We all deserve to be culturally rich AND cash rich.

To keep up-to-date on this issue, follow MaCCNO on Facebook (@MaCCNOpage) and Twitter (@musicculture504); and follow the Greater New Orleans Housing Alliance on Facebook  and Twitter (@GNOHA).

The Music and Culture Coalition of New Orleans (MaCCNO) is a broad-based coalition and registered 501c3 non-profit corporation that collaborates with, organizes, and empowers the New Orleans music and cultural community to preserve and nurture the city’s culture, to translate community vision into policy change, and to create positive economic impact.

This space is provided to MaCCNO as a community service and does not necessarily reflect the opinions or editorial policies of ANTIGRAVITY.