New Orleans – Tax Deal

Rail Transit Online, March 2000

The RTA and the city’s hotel industry have come to an agreement that should clear the way for restoration of streetcars along the full length of Canal Street. The RTA, which was unable to get the trolley’s local funding share from the state legislature or any other source, last year decided to impose its one percent sales tax on hotel and motel rooms. The hospitality industry balked, claiming it was given an exemption when voters approved the tax in 1985. The issue was headed to court until Mayor Marc Morial got both sides together behind closed doors two months ago and kept the talks going until an agreement in principle was reached on Feb. 11. “I think this settlement is a big, big, big win for the people of this city,” Morial told the Times-Picayune newspaper. Under terms of the complex deal, the RTA will drop its lawsuit that – if successful – would have forced collection of the tax. In return, hotels will start charging their guests the extra one percent, probably in May. Of the first $7 million collected annually, 60 percent will go to the RTA for capital projects including the $153 million Canal Street line and the planned trolley along North Rampart Street and St. Claude Avenue. Farther in the future is a proposed light rail line from downtown to New Orleans International Airport. Of the remaining money, 20 percent will be handed over to the New Orleans Tourism Marketing Corp. to expand its advertising budget and the rest will be deposited in a trust fund to pay New Orleans' share of the fourth phase of the Convention Center. Anything collected above $7 million will be split 40/30/30. “I think this settlement has come about because the leaders in the hospitality community in this city...have a lot of vision and understand that what the RTA wants to do with its Canal Street streetcar line and its other rail lines,” Mayor Morial told the Times-Picayune . “One of the reasons people visit New Orleans is because of the historic streetcars.” Added RTA Chairman Bob Tucker, the settlement “…effectively thrusts New Orleans into a prime role as a city that is making the return to rail real.” The agency plans to begin construction on the 4.1-mile project in August and have it open in March 2003.