|
WHAT IS THE IDB
The IDB is a non-profit public corporation authorized to be created
in 1972 by the New Orleans City Council for the purpose of stimulating
economic development and improving the business climate of New Orleans,
through the issuance of tax-exempt bonds and by providing other
incentives as may be allowed by Louisiana law. The directors of the IDB
are residents and voters of the City of New Orleans, who are appointed
by the City Council, with one appointment by the Mayor, to serve
overlapping six-year terms on a completely voluntary basis with no
compensation.
HOW THE IDB FUNCTIONS
The IDB performs its tasks principally through the issuance of
revenue bonds that are payable solely from private funds of the
developer. There is NO obligation to pay these bonds from any public
source of funds. Additional incentives may be offered through the use of
a "Payment-in-Lieu-of-Tax" (PILOT) arrangement whereby the IDB can
effect a freeze or a reduction / abatement of property taxes by virtue
of its status as an entity whose property is exempt from property taxes.
PILOT incentives may include an abatement or partial reduction of
property taxes for a period of years. The decision to support a PILOT
arrangement and terms of each PILOT depend on a number of factors,
including the economic benefits of the project such as employment,
ultimate increased tax revenues, improvement of the quality of life and
other economic benefits, which benefits may include, for example,
improving a targeted area or facilitating the development of targeted
needs of the City.
PILOTS GRANTED
With the exception of projects pursued by the City and/or the State
and housing projects supported and promoted by HANO, very few projects
have qualified for and have received a final contract providing a
favorable PILOT arrangement. Although all projects coming before the IDB
can ask for consideration of a favorable PILOT arrangement, only a small
percentage of the projects that have come before the IDB have asked for,
satisfied the strenuous requirements of the IDB for qualification,
received a vote of approval from the IDB and accepted the clawback
requirements to the extent necessary to actually receive a favorable
PILOT arrangement. While the IDB welcomes consideration of favorable
PILOT arrangements for worthwhile projects that provide a substantial
positive return on investment, the IDB must be satisfied that the
overall benefits received by the City from the project clearly exceed
the costs of the incentive given to support the project.
MODEL
IDB follows the highly successful Louisiana Department of Economic
Development in its processes for reviewing and granting incentives such
as PILOTs. If a PILOT appears supportable, then the IDB engages highly
qualified consultants, including a senior Economics Professor from a
local university, to perform a "cost-benefit" analysis and a "return on
investment" analysis of the proposed incentives package. The IDB Board
considers in detail these reports, which include many factors, including
job creation and specific economic impact on the locale of the project.
The IDB then makes its final decision regarding the PILOT and its
applicable terms.
SAFEGUARDS IN PLACE FOR CITY
There are a number of safeguards in place to protect the City in
connection with PILOT arrangements. In addition to the "return on
investment" analysis, there are "claw back" provisions (both financial
and in terms of Orleans employment levels) included in the PILOT
agreement. The financial “claw backs” are based on the pro forma
financial statements submitted by the project developer to their lenders
and partners. If a PILOT-enhanced project is approved based on an
accepted need, and should the project be more successful than
anticipated, (as determined by audited statements submitted annually by
developers to the IDB), then the taxing bodies, including the City, may
receive increased tax payments. The IDB also strongly encourages the use
of Orleans Parish residents during the construction phase of each
project (and as permanent employees once the project is placed in
service). The value of the PILOT is reduced in the event that developers
do not meet the represented Orleans employment levels of total
construction phase employment. The IDB also encourages small and
disadvantaged businesses to contact the IDB for participation, with the
recognition that they must be able to secure adequate financing for
their projects and have the experience to successfully complete their
projects as submitted.
JOB MATCH
The IDB, working with the New Orleans Housing Authority (HANO) has
established a "Job Match" Program to assist in job placement. The Job
Match involves an online database established by the IDB, into which new
construction jobs are posted by HANO. Through a mentoring program with
the Central City Partnership Skills Bank, the IDB has been able to find
and place some 140 New Orleanians in jobs since August, 2011.
AUDITED FINANCIAL STATEMENTS
The IDB's financial statements are audited annually by a leading local
CPA firm. The annual financial reports are available as a public record
on the IDB’s website (www.IDBCNO.com).
WORKING RELATIONSHIPS
The IDB is working with the New Orleans Business Alliance, the Mayor's
Economic Development Office and other economic development entities and
partners to outline policies and guidelines that are intended to become
a standard for all who wish to invest in the City. The IDB strives for
New Orleans to be more competitive in order to foster recovery and
strengthen the economic base and job opportunities for the City.
The IDB may be contacted through Ms.
Sharon Martin, Administrator, at the IDB office. 658-4242.
Walter C. Flower III, President
Industrial Development Board of the City of New Orleans, Inc. |
