New Orleans is getting more expensive every year.
And the city is paying the price with its rising property taxes.
Property owners have a $1,000 annual tax on rental income, while condo and hotel owners have no tax on rent, according to the Orleans Parish Fiscal Agency.
The new law, approved by the City Council on Thursday, will apply to rental properties in the city, which includes some new development and the construction of new apartments and hotels.
Property taxes have risen by over 30% in the last two years.
City officials said that the tax increase will allow the city to continue to pay for vital public services, including paying for new police and fire protection, and to invest in infrastructure and public safety, including a new sewage treatment plant and flood protection.
But, some residents of city-owned properties have been lobbying for a more modest tax increase, which they say will have a negative impact on their community.
“This tax increase is going to have a significant negative impact,” said Charles T. McNeill, president of the Greater New Orleans Chamber of Commerce.
He said that a 30% tax increase would take out nearly $5 billion in city funding, and that it could lead to increased crime, increased rents and property tax bills for businesses.
“We’re not going to be able to survive with a 30-40% tax rate increase,” McNeill said.
A proposal to raise the tax rate on apartments and condos from 5% to 8% was shot down by Mayor Mitch Landrieu in February.
Landrieu said the increase is necessary to pay down the city’s debt and provide additional revenue for schools and other services.
But the proposal, which would have raised property taxes by $2.4 billion, was opposed by the city council.
Landrieau said that while the city has made progress on the property tax increase issue, there is still a lot of work to be done to get the tax bill down to $2 billion.
The new law will require a majority of the City’s Council members to sign off on any change to the city tax structure.
If the council votes to raise rates on rental properties, the council will have until January 15 to act.
The Council will then have the final say on the proposed rate increase.
With reporting by WGNO’s Ryan C. O’Malley.