Lafayette’s DDA wants a 50% tax hike

   

The enabling legislation for Lafayette’s DDA sets forth goals and rewards for achieving them. The goal is to halt deterioration of downtown property values. The reward is getting an annual percentage of those property values as income. It’s ingenious, because their income will organically rise or fall in direct proportion to their success or failure.

Unfortunately, since director Anita Begnaud has taken over, DDA has failed so miserably that they now require a 50% tax increase just to maintain the same level of income. The Lafayette City Council continues to be arguably the most gullible government body in existence, as they’ve now been snookered into raising taxes to reward DDA’s catastrophic failure!

Lafayette’s city council doesn’t want to hear it

Seventeenth century philosopher, John Milton, once suggested, “let the truth and falsehood grapple… in a free and open encounter.” It sounds great in theory, however it seldom plays out in the real world. Typically what happens is those who can’t successfully articulate their position must silence those who can. One could argue that’s exactly what happened at the Lafayette City Council meeting of February 15th, 2022.

It was during that meeting that Lafayette Downtown Development Authority’s Anita Begnaud, her tax attorney, and Conrad Comeaux spent a considerable amount of time presenting their cause to raise taxes in downtown Lafayette. “Article 7, Section 23” rolled off their tongues so frequently it was almost a mantra. That’s the section of Louisiana’s constitution that allows for taxing authorities to “adjust” (increase) their ad valorem property tax millage if property values drop.

So, while you and I have to gather our families together at the kitchen table to determine what cuts to make when experiencing an income dip, government doesn’t have that problem. “To maintain services” government in Louisiana is mandated to raise taxes by this constitutional section, “without regard to millage limitations” and “without further voter approval.”

Except… that violates Downtown Lafayette’s mission

At that fateful Lafayette City Council meeting, I had just three minutes to illuminate the council on DDA’s mission, as enshrined in the enabling legislation for Lafayette Centre Development District. It can be found as Act-194 of the 1983 regular session. The sections which council’s attention was drawn were 1 and 5a.

Section 1 sets forth the goal for the district, and the standard by which everything is measured. That objective is simply to halt the deterioration of property values in the Commercial Core (downtown Lafayette). To encourage this (and also to discourage failure), the legislation goes on to state in section 5a that the [Downtown Development] authority may levy a special ad valorem tax “not to exceed ten mills.”

Rewarding failure

The Louisiana Bond Commission confirmed that 10 mills is, indeed, a statutory limitation. Over a year ago, the Legislative Auditor’s office informed me that the constitution’s Article 7, Section 23, provides that “the maximum authorized millages shall be increased or decreased, without further voter approval, in proportion to the amount of the [assessed] adjustment upward or downward.” However, while the constitution grants power to increase beyond voter approval, it does not necessarily grant authority to violate the district’s enabling legislation.

The legislative genius of these two sections (1 and 5a) incentivizes them to follow the mission. If the DDA is successful in increasing property value downtown (its core mission), the reward is receiving more tax revenue by organic growth! However, allowing DDA to exceed the 10 mills property tax cap removes the only motivation to follow their mission. The point could be made that ignoring the tax cap actually creates a reverse incentive: rewarding the erosion of property values.

Where’d the values go?

During the meeting, Tax Assessor, Conrad Comeaux, talked about the banks fleeing downtown and taking their deposits with them. In fact, I believe only one bank remains, Chase Bank on Jefferson Street. Mr. Comeaux mentioned several others that have departed the area (in search of lower taxes.) Since the Downtown Development Authority has been “adjusting” the millage up 50% over the last few years, downtown has become overly burdensome to taxpayers. As a result, the banks (that are being taxed on their deposits) made the wise choice to move out.

DDA Board Member, Miles Matt, also mentioned various local governments that had purchased private property. Because the government doesn’t pay taxes, when it buys property the value of that property is removed from the tax rolls. When that happens, the sum total of all property values downtown is reduced, triggering a “mandatory adjustment” (tax increase) on the remaining private property owners. See how that works?

The list of recent government purchases that immediately comes to my mind include:

  1. LEDA’s Gregg Gothreaux purchased a Jefferson Street nightclub for $1 million,
  2. Sheriff Mark Garber bought a building on Vermilion Street for $1 million
  3. The pièce de résistance, Tax Assessor Conrad Comeaux bought a building on Vermilion street for $1.7 million from one of the banks that high taxes chased away!

That’s nearly four million dollars worth of property values that’s been absorbed into the leviathan of government. Those transactions also happen to correspond to DDA’s gradual property tax “adjustment” (increase) to 15 mills, or 150% of the enabling legislation’s limit. The irony here is that Conrad Comeaux has contributed to the deterioration of property values that he himself was lamenting at the city council meeting!

The fix is in?

This whole thing is like a Friday afternoon document drop. It’s a resolution, so it doesn’t have to be introduced, wait two weeks for public input, and then final approval like the process for an ordinance. They hurry up and slap it on the agenda 48 hours before the meeting, then vote for final passage right away. Anyone interested has just a few days to figure out what’s going on, craft a compelling argument, show up at 4:30 and wait patiently until 8:00pm to have three minutes of time.

Then it’s rushed on to the April 30th ballot, right smack in the middle of Festival International. For the last two years it’s been canceled over COVID concerns. Its return this year will likely mean record crowds. Arguably Lafayette’s biggest party, the event takes over downtown Lafayette for five whole days. This is the same downtown where people are expected to show up for an election?

Super-low turnout potential

Add to this, it’s expected to be the only item on ballot for all of Lafayette Parish. This perfect storm means Festival gets immense news coverage while the election gets nothing. Last time this tax was on a ballot was July 21, 2007. There were four items in that election, including three parish-wide property taxes. Of the 5,415 who showed up to vote (a paltry 4.19%), only 87 voters showed up for the downtown tax. It was a low-turnout election by design, but it also wasn’t in the middle of Festival.

Imagine the turnout when only 600 people are allowed to vote parish-wide. If we use 2007’s four-percent (4%), the math works out to a whopping 27 people deciding on $7.5 MILLION in taxes. In that scenario, if it’s a 51-49 election, it only requires 14 voters to pass. That means each vote is worth $535,714, or more than DDA’s entire annual operating budget (page 6, 2022 column) of $423,652!

Is that by design? You bet it is.

What’s the solution?

The fix for all this is to hold DDA to the bargain they struck with the legislature way back in 1983. If they truly want to succeed, then they wouldn’t be asking for a bailout. Withdraw this 15 mills win-lose tax and resubmit it at the correct amount of 10 mills. That matches their enabling legislation. Then, their revenues will increase at the same rate as property values in Downtown Lafayette. That’s a win-win.

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