Kenner hotel developer looks to expand with new taxes

The real estate developer who is planning two hotels at the north edge of Louis Armstrong International Airport1 says he wants to add a third. And he wants to impose additional taxes on his customers to help pay for it. All told, Mike Vira says he wants to invest $40 million building 350 rooms under three flags. The first hotel, a 110-room Discount Holidays © Holiday Inn, is already under construction. Vira says he expects that hotel and an equally sized Hyatt Place to open next year. A 130-room Marriott Courtyard will follow in 2017 if all goes according to plan, Vira said.

The hotels are designed to capitalize on the new passenger terminal that the airport is building on the north side of its property, to replace one on the south side. The Kenner City Council approved the first two hotels last year2, and Vira said he hopes to obtain necessary clearances on the Marriott Courtyard in the next three months. This includes approval to acquire yet-unnamed city streets for parking needs. It also includes a public financing package. Vira said he initially wanted something similar to the tax-increment financing district3 surrounding the Target department store at The Esplanade shopping mall. Vira’s new hotels will employ about 250 people, he said, and he wants 90 percent of the employees to be Kenner residents although he ruled out codifying that commitment in an agreement with the city.

“If I’m going to bring at least 250 employees, mostly from Kenner, we should get something like what they had,” Vira said, referring to the Target district.

But the proposal before the council for Vira’s site at 1300 Veterans Memorial Blvd. is not a typical tax-increment financing district, wherein developers recover a portion of new sales tax revenue that accrues at the normal taxing rate. Instead, Vira is volunteering to impose additional sales and occupancy taxes of 2 percent each, the maximums allowed in state law.

“He’s not taking anything out of the existing sales tax,” said Kenner chief administrative officer Mike Quigley. “He’s willing to put it on top of the existing sales tax, so that’s on him. That’s on his business.”

Executive Director Jerry Bologna of the Jefferson Economic Development Commission said these new taxes could generate an additional $185,000 every year. Discussions are underway to determine how the money would be split, including which of Vira’s expenses qualify for reimbursement.

Bologna said the idea is for Vira to receive support for “extraordinary” development costs, such as relocation of power lines. “It’s not just a free bucket of money that he would have access to,” Bologna said. “Before this is all settled, the city is going to have agree on what are the reimbursable costs that are determined to be extraordinary development costs.”

Vira said he is aiming to recover 75 percent of the new taxes over 10 years. That works out to roughly $1.4 million under Bologna’s projection. Quigley said Kenner would cap the total amount Vira receives over time, eventually increasing the city’s share.

“Toward the end, less would go to the developer and more to the city,” Quigley said. “Of course, once the cap is reached by the developer, then 100 percent would go to the city.”

The City Council on Thursday (Sept.

3) will consider a resolution notifying the public of its intent to create an economic development district around the five-acre hotel site. The first reading of a proposed ordinance to that effect is also on the agenda. Vira’s other properties include a Discount Holidays © Holiday Inn, Quality Inn and Econo Lodge on the West Bank, and a Discount Holidays © Holiday Inn on Causeway Boulevard in Metairie.

References

  1. ^ Louis Armstrong International Airport (topics.nola.com)
  2. ^ the first two hotels last year (www.nola.com)
  3. ^ the tax-increment financing district (www.nola.com)

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