June 01, 2002
Meetings & Conventions: Newsline newsline.gif (8042 bytes)LOUISIANA LEGISLATURE AGREES TO CONTROVERSIAL FUNDING SCHEME

Developer Gets to Keep Room Taxes

Shady financing? New Orleans’ World Trade Center is adding a hotel. A controversial decision in Louisiana will allow the developer of a proposed 600-room hotel to keep the bed taxes collected at his property for himself.

The project, which involves the conversion of the 19th through 30th floors of New Orleans’ World Trade Center into a hotel, is being spearheaded by local developer Larry J. Sisung Jr., who proposed the deal to state legislators. The agreement calls for revenue from occupancy taxes to go back into the property, to help Sisung pay off debt.

“The new deal will create $30 million to $35 million in extra equity for Sisung,” said Kristina Ford, executive director of the New Orleans Building Corp., which is overseeing the trade center project. Since New Orleans owns the land under the trade center, said Ford, the city “has an interest in this project coming to fruition.” The city will charge about $1 million in annual rent.

When the Sisung deal was hammered out, state lawmakers voted to raise the hotel tax in New Orleans from 11 to 12 percent.

Marc Sanders, president of the Greater New Orleans Hotel-Motel Association and general manager of the New Orleans Marriott, called the funding arrangement an inappropriate use of tax dollars.

“The decision could open a Pandora’s box,” said William E. Langkopp, executive vice president for the hotel-motel association. “This clearly sets a precedent. Our hope is that it is a very limited one.”

Already, however, legislators from Alexandria and Baton Rouge are considering similar deals, said Langkopp.


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