Thursday, August 07, 2014

We'll just have to raise more fees and property taxes

So-called "disruption" tech companies are basically just parasites playing a peculiar exploit they've located.  Politically we allow them a lot of leeway right now because cabs are icky and hotels are expensive.  We don't talk so much about just what they are exploiting though.
My public finance nerd came out as I know so many municipalities and counties have depended on levying significant taxation on hotels, taxis and rental cars in order to fund major regional infrastructure and “nice to have” projects such as stadiums.  Locally, there is a significant per-room hotel tax for the convention center, and the convention center bonds are limited obligation bonds for the county where there is no general revenue that the bond holders can claim.  What happens if Uber, AirBnB and other internet enabled services that exist as regulatory and taxation arbitrage  schemes proliferate nationally and take massive market share instead of being the domain of hipsters and quasi-hipsters like my brother?
What happens is the city will have to get their money from you directly.   And this is precisely what the city of New Orleans is looking to do in the form of new fees and higher taxes.  I've mentioned this in several places previously.

Update: Another reason the city is keen to welcome "disruptors" like AirBnB is they're looking to get out of the hotel tax  business anyway.   The new model has them just handing the majority of the revenue back over to the tourism marketers. 
The French Quarter could soon be receiving another $200,000 a month to pay for public safety and quality of life enhancements in addition to the money Bourbon Street businesses agreed this week to chip in for extra police details.

The New Orleans Convention and Visitors Bureau began collecting a 1.75 percent assessment from more than 90 percent of the city's hotels in April, and 0.25 percent of those funds are to be set aside for improvements in the Vieux Carre.
It's worth mentioning also that the city is required to spend this money making the Quarter.. the part of town hoteliers are selling to their customers.. prettier and safer. The rest of it gets spent on bullshit. 
The remainder of the money generated from the extra fee charged on room rates will be split between the Convention and Visitors Bureau and the New Orleans Tourism and Marketing Corporation. It will be used to enhance the city's marketing efforts including sales, promotion, public relations and social media advertising.

The total assessment should generate more than $10 million a year, Perry said.
Tourism comes first. The city comes second. City services suffer, taxes and fees go up, housing costs increase.  All so that tourism leaders can spend more money making themselves more money.

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