Moreover, the information, analysis and promotional materials disseminated by the City and School Board embody candor, openness and accuracy unseen in recent bond elections. Too many times in the past public officials have promoted bond elections with the hollow slogan, "No Increase in Taxes." These bonds will require a small increase in property taxes, but the benefits outweigh the costs by an overwhelming margin.
Advocates enthusiastically supports the bonds and millage authorizations, and vigorously urges its members, subscribers and all New Orleans citizens to vote in favor of all three propositions.
This community desperately needs the new and repaired infrastructure that the bonds provide. It's a solid start toward building a better City.
These school buildings need science laboratories, security facilities, safety and sanitation improvements, asbestos and lead paint removal, air conditioning and heating systems repairs, roof repairs and waterproofing, fencing and improved handicapped accessability; the list goes on. Adequate school buildings are a necessary step toward effective public education.
The Advocates of Responsible Urban Policy is a private, non-partisan, non-profit corporation of the State of Louisiana, exempt from Federal income tax under Section 501(a) of the Internal Revenue Code, as an organization described in Section 501(c)(3). Grantors and contributors may rely on this determination, made by the IRS on November 9, 1992. Our exempt status is retroactive to Advocates' inception on February 24, 1989.
Board of Directors: L. E. Madere, Jr., President; Jerrelyn J. Madere, Secretary-Treasurer; Alphonse Cutitto, Estella Denson, Eddie Kurtz,Jr., John F. Leyens, Jr., Donald McNabb, W. Harold Tinney III, and Eugene Weigand III.
Proposition One authorizes sale by the City of $147 million in General Obligation Bonds. These bonds will be redeemed through a schedule of property tax millage increases starting at 2.5 mills in 1997, rising to 10.6 in 1999, and going down to 9.1 mills in 2000. The redemption of bonds issued earlier reduces prior millages, allowing total millage to remain low.
These general obligation bond funds are necessary to continue the City's capital improvements program. By the end of 1995, New Orleans will have committed all of its existing bond funds to previously approved capital projects. We need funds to continue to rebuild our city. Badly needed capital improvements for streets, public buildings and recreational facilities must be addressed.
The two millages, at 2.5 mills each, fund an Economic Development Fund and the Neighborhood Housing Improvement Fund. By approving Proposition Two, the millages would continue to be collected, but their names and purposes would change.
Capital Improvements Infrastructure Trust The 2.5 Economic Development Fund millage would be rededicated to fund $15.8 million in revenue bonds. Entitled the "Capital Improvements and Infrastructure Trust Fund," it is dedicated to capital improvements and heavy equipment purchases. Dedicated revenue bonds are an innovative approach to capital project funding that expands the City options to fund such projects.
Housing Improvement /Economic Development Trust The 2.5 Neighborhood Housing millage would be rededicated and renamed the "Housing Improvement and Economic Development Trust Fund." These revenues would fund a comprehensive neighborhood housing improvement program to fight urban blight.
In the area of financing, the School Board, with the help of the City, has taken steps to minimize the tax impact on citizens and businesses.
City Casino Money Funds School Repairs First, the School Board will use an annual $2 million payment from the City to service the new bonded debt. The money comes from the annual casino lease payment to the City. This allows the School Board to fund about $27 million in school building improvements without raising property taxes.
Second, the School Board will issue the bonds utilizing a four-year phased approach. Phased bond issuance helps insure that temporary excess bonding or interest payments do not occur.
Further, by selling the bonds over four years, the likelihood increases that projected developments in New Orleans (casino, hotels, commercial properties and housing) will raise the property tax base, actually reducing estimated additional millage required to fund Proposition Three.
Thus, School board funding mechanisms appear prudent and creative. Also, the agreement with the City assures that $2 million in casino lease payments will be directed, not at operating expenses, but at providing permanent improvements to school facilities.
Given the controversy in the past regarding School Board budgets, one may be skeptical about the Board's ability to spend new revenues wisely. To address that skepticism, three facts may be noted: past spending, new faces, and new legal requirements in the proposition.
First, the School Board has produced detail reports on how the 1980 one-half cent sales tax and the 1988 millage increase are being spent. They explain that these revenues are being spent wisely and as promised. These revenues fund programs for student improvement in basic skills, discipline, staff quality improvements, new schools, major maintenance and other needs such as textbooks and equipment.
The entire capital projects part of the 1988 millage, which expires in 2008, has been completely committed, mostly for projects similar to those funded by in Proposition Three.
Next, the players have changed. There is a new School Board, a new Superintendent and new faces among the executive staff. While a new Board may still have to prove itself over the long run, it represents a break from the past and evidence of a desire to improve the way business is conducted.
Case in point: The Proposition Three referendum legally requires the Board to spend the revenues on the specific projects included in the budget. This provides assurance that the money will be spent as promised.
In addition, new School Board policy mandates that architects and other professional consultants be hired on the basis of their professional experience, not political connections.
Considered as a whole, these changes, facts and circumstances provide a foundation for well founded trust and a belief in the School Board's, skill, effort and ability to operate soundly and effectively. We wholeheartedly support Proposition Three and urge Advocates members and subscribers, and all citizens of this City to vote for Proposition Three on July 15, 1995.
By combining the $8.8 million in certificates of indebtedness with the $147 million in general obligation bonds and the $15.8 million in revenue bonds, the City's capital budget funded by the July 15, 1995 referendum will total $172 million.
Proposed Capital Projects, Relative Spending Priorities
Capital Projects----------------Costs in Millions---------------Percent
Streets------------------------------$100.000-------------------------58.2%
Parks & Recreation------------------14.225---------------------------8.3%
Police & Fire--------------------------9.870--------------------------5.7%
Convention Center Expansion--------12.000--------------------------7.0 %
Criminal Justice & Courts System-----5.960---------------------------3.5%
Library---------------------------------1.925--------------------------1.1%
Public Bldgs./Other Improvements----28.020-------------------------16.2%
Total--------------------------------$172.030------------------------100.00%
Sources: Advocates of Responsible Urban Policy; New Orleans City Planning Commission
Included for funding are important, high priority projects such as $5.65 million to close the Gentilly Landfill, $8.50 million to upgrade the Police Communications Center, $1 million to renovate the Mid City Brake Tag Station, and $3.9 million to provide equipment for Fire, Sanitation, and Mosquito Control. All of the funded projects have been through the City Planning Commission's lengthy capital budget review and prioritization process.
This is inadequate, but it's a good start. The City's current five-year capital budget calls for $1 billion to be spent for "basic" improvements such as streets, playgrounds and courts. The $172 million targets only the most urgent of these pressing needs. The City Planning Commission states the situation simply, "The most essential public facilities in New Orleans are in poor condition and getting worse."
Major Streets:
Proposition One lists seventeen streets: Martin Luther King Blvd., Oak St., Jefferson Ave., Magazine St., Louisiana Ave., Poydras St., Prytania St., Elysian Fields Ave., McArthur Ave., Teche St., Esplanade Ave., Almonaster Blvd., N. Galvez St., Louisa St., Alsee Fortier Blvd., Pressberg St., and Crowder Blvd. These streets were selected by objective criteria for inclusion in the capital improvement program. Proposition One will rebuild and repair about twelve miles of major New Orleans streets.
Minor Streets:
$50 million is budgeted for resurfacing minor New Orleans streets, with $10 million allocated to each of the City's five Councilmanic Districts. This translates to almost forty miles of resurfaced minor streets. The Mayor promised that objective criteria would be used to decide which streets would be repaired within each district. We support the proposal and rely on the Council and the democratic process to produce an acceptable list of which streets in each district will be repaired. Neighborhood streets are deteriorating and need repair.
Playgrounds, Pools and Parks: For Our Children and Ourselves
About half of our citizens are under 18 years old. Accordingly, the City's capital budget directs over $14 million to youth and recreational facilities. Because our children's safety is a high priority, Proposition One pays for more lighting and fencing at playgrounds and parks. It upgrades summer recreation facilities with repairs to Joe Brown, Pradat, Lemann, Taylor and Harris swimming pools. Besides NORD pools and playgrounds, Proposition One improves City Park, Audubon Park, Laurence Square, Coliseum Square and Burke/Clay Squares.
Proposition One helps to correct long-standing problems in the City's pools and playgrounds. It provides decent, clean, safe, functional places for our children to play.
Propositions One, Two and Three: How Much Do They Cost?
If all three propositions pass, the total millage on city property will rise by 17.5 mills from 161.33 to 178.83 by the year 2000.
Tax Increases on Property with an Estimated Value of $100,000.
Type of Property --------- Assessed Value----------Tax Due
Residential, Owner Occupied----$2,500--------------$43.75
Residential, Rental---------------$10,000------------$175.00
Commercial & Industrial--------$13,333------------$233.33
Source: Advocates of Responsible Urban Policy.
The table above shows the total annual cost by the year 2000 of the estimated millage increases on three categories of property, each with a market value of $100,000.
Owner Occupied Residential Property
The first category, owner-occupied residential property, benefits from the $7,500 homestead exemption. Residential properties are assessed at 10% of market value for both the land and the buildings. Although this home would be assessed at $10,000, the owner would receive the benefit of the $7,500 homestead exemption.
Because of the homestead exemption, only $2,500 of this home would be subject to the 17.5 mills increase. This amounts to an increase of $43.75 per year or about $0.12 per day. Homestead exempt properties assessed at $7,500 or less would pay none of the millage increase.
Residential Rental Property
The second category, residential rental property, is not subject to the homestead exemption. It is assessed at 10% of market value for both land and buildings. Thus, a $100,000 residential rental property would be assessed at $10,000. The additional millage would increase the tax bill to the owner by $175 per year, $14.58 per month or about $0.48 per day.
Considering the number of vacant or abandoned houses and apartments in New Orleans, few landlords will be able to raise rents to pass on the increased taxes. Fifteen years ago, when vacancy rates were low, landlords were able to raise rents at will. Back then, tenants competed for apartments. Today, landlords compete for tenants.
Commercial and Industrial Property
The third category, commercial and industrial property, is not subject to the homestead exemption and is assessed at 10% for land and 15% for buildings. In calculating assessed value, Advocates assume that one-third of the market value comes from land value and that two-thirds from the buildings.
Using these ratios, a $100,000 property is assessed for $13,333. The 17.5 mills increase would raise property taxes by $233.33 or $0.64 per day.
Conclusion
The property tax increases associated with Propositions 1,2 & 3 are modest for all classes of properties
No tax increase for homestead exempt properties worth $75,000 or less.
Small increases for most residential property owners and small businesses.
Moderate increases for commercial and industrial properties.
Homeowners and business alike benefit from rebuilt or repaired streets. The Convention Center continues to expand, creating jobs and economic opportunity. Parents and children have decent, safe school buildings.
We all benefit from good streets and public schools. We intend to continue to live in New Orleans; we intend to keep our City in good repair. We want safe, air-conditioned schools for our children, pothole free streets to drive on, restored public buildings, playgrounds and parks. We want the jobs and business related to continued convention trade and tourism.
We live in this City. We have not left for the suburbs, nor do we intend leave this City. The long-range effect of these improvements creates a more productive work force and a better place to live.
New Orleans Debt Burden, General Obligation Debt, Adjusted for Inflation
Year-----Millage----Debt in Millions---Per Capita Debt
1988------34.2----------$360.7----------$696.34
1992------26.9----------$327.2----------$661.08
1996------26.9----------$305.0----------$610.77
2000------36.0----------$271.9----------$538.15
Sources: Advocates of Responsible Urban Policy; New Orleans Board of Liquidation; 1993 Annual Financial Report; Consumer Price Index, U. S. Department of Labor.
The table above displays those property tax millages levied between 1988 and 2000 used to redeem general obligation bonded debt. Outstanding debt has been adjusted for the effects of inflation and is divided by population estimates to calculate the per capita debt burden.
Clearly, tax millages decline and then rise during the period covered by this table. However, in real terms (adjusted for inflation), debt declines $88.8 million between 1988 and 2000. Sale of these bonds prevents debt from decreasing further, while estimated debt retirement and inflation cause total real debt to fall $89 million below the 1988 level, by the year 2000.
Real per capita debt follows a similar pattern, falling in 2000 almost $158 per person from the 1988 level. Again, the 1996 real per capita debt reflects the bond sales authorized by Proposition One.
Currently, the City's legal debt limit is $616.7 million. The current legal debt margin, outstanding debt subtracted from the debt limit, is about $173 million. After all bonds authorized by Proposition One are sold, the City will have a remaining legal debt margin of over $133 million.
In short, Proposition One keeps the City's general obligation bonded debt well within historical limits. In the year 2000, estimated millages will have lowered real per capita debt to significantly less than the 1988 level. In real terms, bonded debt and per capita bonded debt fall below current levels.
Measured against our estimated 1995 per capita personal income of $21,134 , the New Orleans residential tax burden will increase by less than two-one thousandths of one (0.002%) percent for all three propositions.
The first column lists the actual assessed value of property for 1988 and estimated assessed property values through 2000. The second column estimates outstanding general obligation debt through 2000, not adjusted for inflation. The third column calculates the ratio between the first two, assessed value and outstanding debt.
New Orleans Property Tax Assessments and General Obligation Debt
Year---Assessed Value-----Gen. Oblig. Debt---Assessed Value to Debt Ratio
1988------$1,886---------------$411.0----------------21.79
1992------$1,803---------------$442.1----------------24.52
1996------$1,870---------------$462.0----------------24.71
2000------$2010----------------$463.4----------------23.05
Sources: Advocates of Responsible Urban Policy, New Orleans Board of Liquidation, 1993 Annual Financial Report.
The taxes used to redeem general obligation debt are levied against the total assessed value of property in New Orleans. In 1995, the City estimates that each mill of property tax will yield $1,188,143 in revenues. However, as assessed property values rise, each mill of property tax generates more revenues, increasing the ability of the property tax base to service more outstanding debt.
A Shrinking Tax Base Begins to Grow
The New Orleans economy began shrinking in 1981. As jobs began to disappear, people left town, businesses closed and buildings became vacant or were abandoned. Decreasing property assessments reflect our economic decline. This can be seen in column one as the tax base shrinks between 1988 and 1992.
However, the economy has begun to grow, pushing the tax base higher as property values rise. We see it everywhere. Neighborhoods, shopping strips and shopping centers, the French Quarter and the CBD all show signs of revitalization. Renovation and new construction abound. There's a new optimism about New Orleans, based in part on tourism and the casinos.
Debt Increases, Then Decreases
Column two lists general obligation bond debt, including the estimated increase caused by the sale of the bonds authorized by Proposition One. By 2000, outstanding debt falls to about the 1996 level.
Column three calculates the ratio of property assessments to debt. That ratio reflects both increasing assessments and the increased debt authorized by Proposition One. By 1996, the ratio of assessments to debt increases to 24.71. By 2000, the ratio decreases to 23.05 and declines thereafter.
At first, Proposition One increases debt relative to the tax base by about two (2% ) percent. However, by 2000, the ratio of assessments to debt declines to six (6%) percent less than the 1992 level.
1995 City, School Board and Levee Board Property Tax Millages
City:------------------------------------------------Mills
General Purpose-----------------------------14.91
Debt Service---------------------------------26.90
Sewerage & Drainage------------------------22.59
Police & Fire, Homestead Exempt------------6.40
Police & Fire--------------------------------10.47
Law Enforcement- New Jail------------------3.00
Traffic Control system------------------------1.90
Neighborhood Housing-----------------------2.50
Economic Development-----------------------2.50
Parkways & Parks----------------------------3.00
Aquarium-------------------------------------4.11
Audubon Park & Zoo------------------------0.44
Library---------------------------------------4.32
Board of Assessors--------------------------1.19
Orleans Parish School Board-------------45.10
Orleans Parish Levee board--------------12.01
Total City, School & Levee----------------161.33
Special Tax Districts:
Downtown Development District-------------15.68
Almonaster Michoud Industrial Dist.---------20.00
Source: Advocates of Responsible Urban Policy, 1993 Annual Financial Report, Board of Liquidation
Contact Advocates at: lmadere@neosoft.com or visit times since August 5,
1995.