On June 29, 2005, the Louisiana Supreme Court struck down as unconstitutional a statute, La. R.S. 33:9038.21, designed to support the construction of a privately-owned $190 million hotel, featuring more than 600 rooms, in the World Trade Center — a 33-story, city-owned building at 2 Canal Street — through the use of revenue bonds secured by a special hotel occupancy tax.
The statute created the World Trade Center Taxing District as a special taxing and tax increment financing district in Orleans Parish, designed to “provide for cooperative economic development between the City of New Orleans, the World Trade Center, the District, and WTC Development Ltd., to provide for the renovation, restoration and development of the city owned property known as the World Trade Center….” The District was empowered to issue revenue bonds to finance “any projects consistent with the purposes of the District,” and to pledge those taxes to “any financing of the WTC property in furtherance of the purposes of the district.”
The problem? The hotels in the District which would be subject to the new tax — including the new hotel itself — were already subject to two hotel occupancy taxes; one levied by the Louisiana Stadium and Exposition District, and the other by the New Orleans Exhibition Hall Authority.
The case incidentally reminds one that, instead of the limited, delegated powers exercised by the U.S. Congress (although, admittedly, pretty hefty ones, like waging war and filibustering federal court appointees), our legislature can enact any legislation not prohibited by the Louisiana Constitution. This sweeping prerogative is pragmatically tempered by the 56 titles and hundreds of sections in our Constitution. It has historically been fairly difficult for the legislature to indulge any free-ranging impulses without running smack into one or more constitutional curbs.
The curb smacked into in this case is La. Constitution art. VI, Section 29, which bans exemptions from taxes which support existing bond issues.
The Plaintiff District argued (among other angles) that the prohibition should be limited to those situations where evidence showed an exemption would actually impair existing bonds. Justice Knoll, writing for the majority, disagreed, stating: “The Legislature is prohibited under Section 29(D) from enacting tax exemptions where those taxes secure bonds already authorized.”
The Court struck down the entire statute.
There is no way that my blurb can do the opinion justice, so please read the whole opinion here.