Spring Meeting Highlights

Wal-Mart projects have sparked controversy from Vermont to California. The Planning & Law Division of the American Planning Association co-sponsored one of the most lively sessions at the Section Spring Meeting: "The Wal-Mart Controversy: A Test for the New Orleans Planning and Zoning System." Moderated by Planning & Law Division Chair, Deborah M. Rosenthal of Irvine, California, the presentation addressed all sides of the controversy, which raises issues of national importance. The project, located on the Mississippi River in the historic Lower Garden District, consists of a large Wal-Mart supercenter with well-designed moderate to higher priced housing and public open space. Dilapidated housing on the site was cleared by the local redevelopment agency, with assistance from the federal HOPE VI program. The complicated local planning issues included the impact of a Wal-Mart supercenter on small area businesses, the need for additional area retail, displacement of former low-income area residents unable to afford higher-income replacement housing, compliance with federal HOPE VI funding requirements, flood control, historic compatibility, and traffic.

William Borah, a local New Orleans attorney and preservationist, described the local political and planning context in which the project was approved, including the city's long struggle to rationalize the planning process and to fight government corruption. Mike Rolland, a local New Orleans environmental attorney, outlined the federal litigation against the Wal-Mart project brought by a consortium of preservation, housing, and environmental groups, primarily involving interpretation of HOPE VI replacement housing requirements and the adequacy of NEPA review. Gary Elkins, a real estate attorney representing the New Orleans developer, defended the Wal-Mart project as a successful way to attract middle-income residents to the city and to bring low-cost retail to an underserved urban market. Finally, Daniel Mandelker, a law professor at Washington University at St. Louis, summarized recommendations developed through a study of the New Orleans planning system. Among other comments, Professor Mandelker recommended stronger neighborhood and community planning guidelines for projects with significant impacts.

The session highlighted the legal, political, social, economic, historic, and physical factors that affect all planning decisions, with the mix depending on the locale and the specific project. In this case, the Wal-Mart supercenter project was a challenge on all levels.

Financing Historic Preservation in New Orleans

The Section's Spring Meeting featured a two-act presentation centered on the largest ongoing urban development project in New Orleans, not far from where the meeting was held. The St. Thomas Redevelopment Project was analyzed by legal and planning professionals from the dual perspectives of land use law and financing.

The unique blend of historic preservation of community landmarks and new residential and commercial construction is adjacent to the Port on one side and the Garden District on the other, just two miles from Canal Street. Its unusual scope of inter-related land uses are described in the accompanying article by Deborah Rosenthal, who led that panel.

Starting in the late 1990s, sufficient funding means had to be identified and resources produced. This required creative partnering between private and public sectors, city and state approvals, and entailed legislation and litigation. The path led to financing from complementary sources and the project is now heading toward completion.

St. Thomas provides a valuable case study, but further offers a model for inner-city initiatives elsewhere. Contentious positions of community and civic groups marked the initial proposal and clearance of the site. But its conclusion illustrates that land use and financing hurdles can also become opportunities. The creative partnering was led by the Historic Restoration Inc. (HRI), based in New Orleans, and by the City of New Orleans.

The finance program included Pres Kabacoff, HRI chief executive officer (and member of the Louisiana Bar), Gary Elkins of Elkins PLC, counsel to HRI), Sherry Landry, city attorney, City of New Orleans, and Ken Bond of Squire Sanders & Dempsey in New York City. The program was moderated by Steve Weinstein, Finance Committee chair.

Ken Bond led off with an overview of the tax increment financing (TIF) technique from a national perspective. That approach to public funding centers around the concept of capturing the rise in tax revenues from property or sales taxes emanating from new development investment. That increment provides security to support municipal revenue bonds. Although practiced in many areas of the country for some time, it was new to Louisiana, authorized by recent state statute. His paper is available upon request.

Louisiana's tax increment financing is tied to sales tax revenues from the principal commercial component of the project. The statute was used for the very first time to fund a portion of the St. Thomas project and successfully withstood challenge in state court. That challenge, along with others in federal fora directed at another partial funding source from U.S. Housing and Urban Development programs, were described by Gary Elkins. He also explained the particulars of the St. Thomas tax increment financing. Sherry Landry narrated the course of negotiating the master development agreement between HRI and the city and offered the city's perspective on successfully concluding that partnership.

Pres Kabacoff provided a sound-and-light show illuminating the physicality as well as the legal and financial structures supporting St. Thomas. The development, currently in complete construction, spreads across more than sixty acres and provides a combination of over 1,200 housing units mixed among market-rate and low-income residences. The key commercial element generated much of the controversy and legal contest-a Wal-Mart supercenter along one perimeter of the site. The legal challenges appear to be over, but the planning and financing remain controversial issues in New Orleans.

Wal-Mart is also key to the financing package, with $30 million of sales tax increment bonds tied to its operation and applied to pay for a substantial portion of the housing. Other municipal bonds were issued by Louisiana's Industrial Development Board to fund the store itself and some apartments. A federal Hope VI contribution of $25 million supports the assisted housing. HRI is the project developer.

Around the country, situations are evolving where so-called big-box retailers are seeking to enter distinctly urban areas and where city governments are engaged in large-scale revivification of under-used inner-city land. The experience of St. Thomas may offer both sectors the bases for constructive legal and financial partnerships.