Incentives in Place for The Beacon at South Market District
20 October 2014
As Woodward Design+Build prepares to start construction on The Beacon at South Market District, city incentives have been finalized for the next phase of the exciting mixed-use development.
Incentives in Place for next South Market District segment
New Orleans CityBusiness
17 October 2014
With construction set to start on the third phase of South Market District, the city has agreed terms with the developers on incentives for next part of the project in the Central Business District.
On Tuesday, the city’s Industrial Development Board voted in favor of a 10-year payment in lieu of taxes, or PILOT, agreement with the Domain Cos. for The Beacon, a $39.6 million residential and retail building that is part of the $200 million residential and retail development in the Central Business District.
The IDB agreed to an overarching PILOT for South Market District in 2012 and negotiated similar 10-year tax break agreements for the project’s first two phases, which are already under construction.
Under the terms of the deal, the IDB holds title to the property, and Domain will make a yearly payment in lieu of tax on or before Feb. 1 starting in 2015. The estimated yearly tax on the Beacon property, based on 2014 millage rates, is $478,562.
According to the agreement, Domain will pay $22,239, or roughly 4 percent of the annual tax bill, while the project is under construction for the next two years. Starting in 2017, Domain will be responsible for 25 percent of the total estimated tax amount.
The annual payment will increase 5 percent each year until 2024, when it reaches 40 percent. The payment will jump to 55 percent in 2025 and then to 75 percent in 2026, the final year of the PILOT.
As part of the agreement, Domain also agreed to more aggressive goals for employment of city residents and partnerships with disadvantaged business enterprises during construction. The terms include 35 percent DBE participation and a goal to hire contractors with at least 40 percent of the employees from Orleans Parish. The previous PILOT agreements included a 30 percent “good faith effort” goal for both.
Woodward Design+Build is the general contractor for the entire South Market project.
IDB bond attorney David Wolfe said Tuesday’s PILOT approval would be the last given for South Market District under its original incentive deal. The terms of the Beacon agreement dictate there is no commitment from the city to any tax or financial subsidy for future South Market District phases. Any future projects tied to the development would be considered separately, he added.