Burns, Thomas / NEW ORLEANS GOVERNORS 10.1177/1078087404264918 URBAN AFFAIRS REVIEW / July 2004 ARTICLE GOVERNORS AND THE DEVELOPMENT REGIME IN NEW ORLEANS Loyola University, New Orleans California State University, Chico PETER F. BURNS MATTHEW O. THOMAS Regime theory argues that local actors shape city politics even though state government sets the rules under which urban players act. Regime theorists typically do not focus on conditions under which governors assume important roles in local regimes. The authors examine major economic development projects in New Orleans to highlight conditions under which extralocal actors, namely, governors, become involved in local regimes. A scarcity of both resources and business leaders in New Orleans, competition with other states, and political considerations motivated Louisiana governors to increase their participation in New Orleans’s urban development regime. Governors constituted part of the mobilization effort to move the city from a caretaker regime to a progrowth regime. They used their authority, fiscal resources, and leadership skills to assume this greater role. Gubernatorial participation in the regime benefited governors, New Orleans mayors, and major businesses at the expense of tourists, working-class and poor residents, the state legislature, and the state’s business reputation. Keywords: economic development; regime theory; New Orleans Regime theorists contend that resource providers shape urban public policy, but they limit their analyses primarily to local actors. To gain a more complete understanding of regime politics, we examine conditions under which governors assume an increased role and participate actively in an urban development regime. We also analyze the consequences of a regime that includes extralocal actors. Through a study of major economic development projects in New Orleans, we conclude that scarcity of resources and business AUTHORS’ NOTE: The authors wish to thank the anonymous reviewers, the editors of the journal, Kate Adams, and Linda Moore. URBAN AFFAIRS REVIEW, Vol. 39, No. 6, July 2004 791-812 DOI: 10.1177/1078087404264918 © 2004 Sage Publications 791 792 URBAN AFFAIRS REVIEW / July 2004 leaders at the local level, competition with other states, and political considerations motivated governors to play a part in the urban regime. REGIME THEORY, STATE GOVERNMENT, AND ECONOMIC DEVELOPMENT Urban regimes often include public and private actors because cities operate with scarce resources (Elkin 1987; Stone 1989; Dowding 2001). Local elected officials must create the power to govern because limited financial capacity and institutional frameworks restrict the extent to which they dictate the actions of businesses, citizens, and other actors. Business leaders constitute one part of many governing coalitions because they control financial resources that make urban governance possible. In contrast to elite theory, regime theory holds that local public officials make genuine choices in response to the economy and do not simply follow the commands of business (Stone 1987). To achieve their policy objectives, leaders of regimes must convince other coalition actors that their policy agenda is socially worthy, achievable, and timely (Stone 1993). Regime actors facilitate governance through cooperation, not coercion. They provide selective benefits to other regime actors to gain this cooperation and create reciprocal relationships with other coalition members (Mossberger and Stoker 2001). One of the most significant criticisms of regime analysis is the lack of attention theorists pay to the role of extralocal actors in urban affairs (Harding 1995; Kantor, Savitch, and Haddock 1997; Sites 1997; Ward 1997; Imbroscio 1998). Lamenting regime theory’s concentration on local actors, Lauria (1996) argues for a different theoretical approach, namely, regulationist theory. In addition, Ferman (1996) calls on regime analysts to consider how intergovernmental relations influence urban politics and policy. Regime theory lacks a serious discussion about situations in which extralocal actors, specifically governors, increase their direct involvement in urban regimes. Regime theorists believe outside actors, such as the federal and state governments, set rules for and provide financial resources to cities but that local players shape urban public policy (Stone 1998, 2). They do not claim that governors are incapable of playing the role of regime actor. Instead, regime theory focuses on how interactions between local actors shape urban public policy. The changing nature of the economic capacity and business climate in certain cities challenges this historical trend to emphasize local actors. Today, there are opportunities for the inclusion of extralocal regime actors because Burns, Thomas / NEW ORLEANS GOVERNORS 793 businesses relocate, cities lose locally based national headquarters, and local tax bases dwindle. The changing intergovernmental context provides governors with increased motivation to assume important roles in urban regimes. As cities receive significantly fewer federal dollars and projects, governors provide more resources to, and assume a larger leadership role in, urban regimes. Regime theorists may not address why governors assume important roles in urban regimes because these transformations and their implications are relatively new phenomena that occurred after major works, such as Stone’s Regime Politics (1989), were written. Turner (1990) does not specifically examine state governments’ involvement in urban governing coalitions, but she suggests that authority and finances connect states and localities and politics determines the relationship between states and urban areas. This article builds on previous works about the limitations of regime theory, in general, and Turner’s insights, in particular. It provides an empirical account of conditions under which governors assume important roles in a development regime. It explains how authority, finances, and politics affect gubernatorial involvement in urban regimes by utilizing the case of New Orleans. THE ROLE OF GOVERNORS IN URBAN AFFAIRS Turner (1990) suggests that governors possess the authority and resources to increase their direct participation in urban development regimes. The constitutional inferiority of localities enables governors to exert considerable influence over urban politics and policy (Burns and Gamm 1997). According to state constitutions, local governments borrow their power from states and act as agents for state governments (Burns et al. 2001, 152). States’ taxing authority allows governors to provide resources to local governments. On average, state aid constituted slightly more than one-third of local revenues in the 1990s. State financial aid has made up a larger share of city revenues than local property taxes in the past 25 years (Sokolow 1998). Cities grew even more dependent on state finances as the federal government decreased the level of aid it allocated to urban areas (Marando and Reeves 1985; Kantor 1988; Agranoff and McGuire 1998; Zimmerman 2001). Devolution opened the door for state-level actors to become more engaged with urban regimes (Eisinger 1998). As Turner (1990) also implies, political considerations may motivate governors to increase their involvement in urban regimes. Governors set the legislative agenda; guide important bills through the state legislature; shape public opinion; manage crises; and negotiate with federal, state, regional, and city officials (Dye 2000, 200-202). The visibility and importance of address- 794 URBAN AFFAIRS REVIEW / July 2004 ing issues in urban areas might motivate governors to reshape urban regimes to show voters they are performing their duties. GOVERNORS AND ECONOMIC DEVELOPMENT Governors address many issues including education, welfare reform, the environment, transportation, public safety, and taxation (Hanson 1998). Economic development also constitutes an important policy area for many states, especially those with scarce resources. Many governors try to retain and develop jobs, attract and maintain businesses, and increase revenue (Bingham and Bowen 1994; Saiz 2001). States spend billions on economic development programs, and by 1994, the 50 states created more than 900 separate programs to encourage economic development (Saiz 2001; Saiz and Clarke 1999). Most state economic development programs produce few jobs, fail to create new wealth, and lack a strong and measurable influence on economic growth (Rubin and Rubin 1987; Brace 1993; Dewar 1998). States and cities continue to build sports stadiums and subsidize professional sports franchises even though scholars find that these endeavors create few jobs and cost cities, states, and taxpayers millions (Rosentraub 1997; Baade and Dye 1996; Euchner 1999). However, more recent research suggests that the combination of public policy, business commitments, and sports facilities can refocus some development activity in downtown areas (Austrian and Rosentraub 2002). Many considerations motivate state and local officials to actively pursue development projects, despite evidence that these plans neither create new wealth nor generate jobs (Dewar 1998). As agents for state governments, governors may provide businesses with attractive fiscal packages to compete against bordering states (Saiz 2001; Wolman 1988; Peterson 1995). Elected officials may also adopt economic development projects that hold little promise of producing projected benefits to show constituents they are doing something about the state’s problems (Dewar 1998; Wolman 1988). LOUISIANA GOVERNORS AND THE NEW ORLEANS DEVELOPMENT REGIME This article explains why governors play a significant part in local regimes, the resources and motivations that drive governors to assume a greater role in urban affairs, and the consequences of gubernatorial involvement. It examines two of New Orleans’s most significant economic develop- Burns, Thomas / NEW ORLEANS GOVERNORS 795 ment projects over the past 15 years to illustrate why and how governors play important roles in an urban development regime. In our examination of the establishment of a casino on the edge of the French Quarter and the recruitment of a National Basketball Association (NBA) franchise to New Orleans, we pay attention to the factors that led governors to increase their involvement in the New Orleans regime. The article also specifies the resources that enabled governors to expand their role in urban affairs and identifies the consequences of increased gubernatorial participation in the local regime. NEW ORLEANS ECONOMY The poverty rate, population decline, and job loss in New Orleans illustrate the scarcity of resources in this city. According to the 2000 census, approximately 28% of New Orleans residents live below the poverty level, whereas 11.3% of Americans live in this condition. The population in New Orleans decreased by approximately 20% from 1960 to 1990, and more than 12,264 residents left the city from 1990 to 2000 (Mumfrey and Pinell 1992). New Orleans lost 40,000 jobs from 1980 to 1990, and the city experienced a 3.3% decline in employment in the 1990s (Mumfrey and Pinell 1992; Angelou 2002). By contrast, during the 1990s, employment grew in Atlanta by 37.3%, jobs increased in Austin by 60.1%, and Orlando experienced a 40.4% job increase (Angelou 2002). The loss of many major businesses and decreases in federal aid created a leadership and resource void in New Orleans. Before the 1990s, oil, the New Orleans port, and tourism drove the city’s economy (Whelan 1989). In 1982, the oil and gas industry employed 28,000 people in New Orleans. By the late 1980s, however, oil and gas prices dropped significantly, and the city lost business to other ports. During the 1990s, Amoco, Chevron, Mobil, Texaco, and Shell closed or significantly consolidated their New Orleans offices (Mullener 1999). By 2001, only 13,000 people worked in the oil and gas sector in New Orleans (Oil jobs down in New Orleans 2000). The federal government played a much less prominent role in New Orleans in the 1990s than it did in the 1970s and 1980s. In the 1970s, federal dollars helped fund two of the city’s major development projects, and urban development action grants partly financed an exhibit hall, a downtown mall/ business facility, and the development of the waterfront in the 1980s (Whelan 1989). Federal aid to New Orleans decreased substantially in the 1990s. In 1975, federal aid constituted more than 25% of the city’s revenue and nearly 60% of the city’s intergovernmental revenue (City of New Orleans 1976). By 2000, however, the federal government contributed 29% of the city’s inter- 796 URBAN AFFAIRS REVIEW / July 2004 governmental revenue and only 7% of New Orleans’s total revenue (City of New Orleans 2002). CHANGES IN THE NEW ORLEANS REGIME From 1945 to 1970, a caretaker regime protected small property holders and members of the New Orleans social aristocracy by resisting a large-scale economic development program in this urban area (Whelan 1987). After 1970, business organizations that represented large and medium-sized companies in the city and mayors initiated the transition to a corporate regime in New Orleans (Whelan, Young, and Lauria 1994; Reed 1988). Federal and state funds financed this regime. In the late 1980s, a number of private entities planned and executed New Orleans’s economic development strategies. These business organizations, which included the New Orleans Regional Chamber of Commerce, operated with autonomy and they ensured government’s economic developmentobjectives (Whelan, Young, and Lauria1994, 10). As the 1990s progressed, the loss of the petrochemical industry made it difficult for public and private actors to sustain the corporate regime. The absence of private regime actors and federal funding in New Orleans required local actors to secure finances and leadership from other sources to facilitate governance. The loss of major companies removed many of the business executives capable of and motivated to engineer large-scale economic development projects. A small set of business leaders persists in New Orleans. The New Orleans Regional Chamber of Commerce, a group consisting of more than 2,100 large and medium-sized businesses in the New Orleans metropolitan area, and MetroVision,1 constitute part of the local regime because they control significant financial resources in Louisiana and New Orleans. The following sections explain how governors interacted with such local regime actors in New Orleans to accomplish their goals through the establishment of a land-based casino and the recruitment of an NBA team to the city. NEW ORLEANS’S LAND-BASED CASINO Governor Edwards Assumes an Important Role in the New Orleans Development Regime In 1992, Louisiana Governor Edwin W. Edwards (1972-1980, 19841988, 1992-1996) initiated efforts to build a land-based casino in New Burns, Thomas / NEW ORLEANS GOVERNORS 797 TABLE 1: Chronology and Summary of Selected Benefits Offered by the Louisiana and New Orleans Governments During Various Deals Associated with Starting and Continuing a Land-Based Casino in New Orleans Date January 1986 Spring 1986 June 1992 Event/Selected Benefit In his third term as governor, Edwin Edwards initiates a plan to build 10 to 15 Las Vegas–style casinos in New Orleans. Louisiana legislature votes against casino in New Orleans. In response to a Wall Street Journal ad placed by the city of New Orleans regarding the future of the city’s Rivergate property, 10 companies, including Harrah’s, want to use the facility for gaming. Governor Edwards signs the bill to authorize a land-based casino in New Orleans. New Orleans Mayor Sidney Barthelemy awards the Rivergate lease to Hemmeter/Caesar’s. The state’s casino board grants a gambling license to a group headed by Harrah’s. Governor Edwards negotiates a deal between the proprietors of the Rivergate lease and the holders of the state’s gambling license. Mayor Marc Morial and Governor Edwards negotiate a deal that provides New Orleans with $10 million from the state and Harrah’s. The deal also calls for the city to receive $12 million more if the casino grosses $400 million annually. Temporary casino opens in New Orleans’s Municipal Auditorium. Harrah’s lays off 500 employees and closes 20% of the temporary casino. Harrah’s files for Chapter 11 bankruptcy, closes the temporary casino, and stops construction on the permanent gaming hall. New Orleans city council approves changes to the lease and zoning permits to allow for a scaled-down version of the land-based casino. Louisiana legislature fails to approve the deal, negotiated by Governor Foster and Harrah’s, to reopen the casino. After failing to get the votes necessary to pass a renegotiated deal with Harrah’s in a special session of the state legislature seven months before, Foster presents the new deal to the Louisiana Gaming Board, which passes the measure by a seven-to-one vote. The revised contract calls for Harrah’s to provide a $100 million payment to the state in any year the casino is open. City council unanimously passes a new lease that requires Harrah’s to pay $750,000 rent per month until November 1, 1999, when the casino must pay a $1 million monthly fee to the city regardless of whether the gaming hall was operational. Land-based casino opens in New Orleans. (continued) November 1992 August 1993 July 1994 May 1 1995 August 1995 Thanksgiving eve, 1995 October 1996 June 1997 October 1998 October 1999 798 URBAN AFFAIRS REVIEW / July 2004 (Continued) Event/Selected Benefit The New Orleans Regional Chamber of Commerce asks the governor to cut Harrah’s $100 million annual payment because the casino contributed more than $80 million in payroll and benefits into the regional economy. Mayor Morial renegotiates Harrah’s lease so the casino can pay $5 million less in annual payments to the city. The city council also approves zoning and ordinances changes necessary to expand food and hotel services at Harrah’s. In exchange for these concessions, Harrah’s increases the percentage of revenue it will provide to the city. Louisiana legislature approves a three-year contract, which stipulates that the casino would pay $60 million to the state in the first year and $50 million in the next two years or 21.5% of gaming revenues, whichever is higher. The deal also links a teacher pay raise to the revised contract. The casino allocates at least $60 million in annual revenue to the state, and it employs more than 2,400 people. TABLE 1 Date August 2000 January 2001 March 2001 Current SOURCE: C. B. Forgotston, “Appendix 2: Chronology of Events in the Gambling Blitz: 6 January 1986–21 November 1995,” in The Rivergate (1968-1995): Architecture and Politics: No Strangers in Pair-a-Dice (New Orleans, LA: Howard-Tilton Memorial Library, 2000). http:// www.tulane.edu/rivgate/. Orleans, and his successor helped open and maintain this gambling facility (for a chronological list of the deals associated with the land-based casino, see Table 1). New Orleans’s actors alone lacked the public and private resources necessary to finance this type of project. Localities did not have the legal capacity to initiate the casino. Only state-level actors held the authority to legalize a land-based casino in New Orleans. New Orleans’s actors possessed resources Edwards needed to realize his vision of a land-based casino in New Orleans. For example, only the city, in general, and Barthelemy, in particular, held the power over the building in which the casino would be located. New Orleans actors also made planning and zoning changes to allow the casino to move forward. Edwards and the speaker of the Louisiana House of Representatives guided the land-based casino legislation, which barely passed the House by 53 to 50 and the Senate by 21 to 18. In addition to legalizing a land-based casino in New Orleans, this gambling bill established a nine-member quasigovernmental casino corporation. The governor appointed most of this Burns, Thomas / NEW ORLEANS GOVERNORS 799 board’s members, and the Louisiana Senate confirmed the nominations, giving the governor significant control over gaming matters. Edwards and Mayor Barthelemy did not have a close working relationship, and Barthelemy resented what he perceived as the governor’s attempts to take complete control of the project. In typical regime fashion, however, these coalition actors formed a reciprocal relationship because each possessed resources needed by the other. For example, Edwards offered the selective benefits of extra state funds for New Orleans and the authority to establish a land-based casino. In return, Barthelemy issued the lease for the gaming hall and oversaw zoning changes necessary for the establishment of the casino (Bridges 2001). In exchange for Barthelemy’s continued support for the casino, Edwards endorsed the mayor’s decision to locate a temporary casino at the municipal auditorium in New Orleans’s Treme neighborhood. Edwards worked with a number of gaming corporations, including Caesar’s and Harrah’s, to bring a land-based casino to New Orleans, eventually settling on Harrah’s. Furthermore, when the state and city governments issued the gambling license and the lease of the land-based gambling hall to different actors, Edwards negotiated the agreement that made the holders of the license and the lease equal partners in the casino. The deal granted one-third of the casino each to a group of local investors, Harrah’s, and Christopher Hemmeter, the developer who held the lease to the gaming facility. Together, the governor, the mayor, and casino interests worked to make the land-based casino a reality in New Orleans. Mayor Marc Morial (1994-2002) and Governor Edwards also had a tenuous relationship. In one of his first moves as mayor, Morial asked Edwards to provide $32 million to New Orleans as compensation for increased costs incurred from the casino (Bridges 2001, 206). Morial told the governor the city council would void the casino’s lease if New Orleans failed to receive this payment. Edwards ultimately convinced the members of the state legislature and the owners of Harrah’s to provide $22 million to New Orleans (Bridges 2001, 206). Morial accepted this deal and withdrew his threat. The settlement called for the state to provide $6 million to New Orleans in 1994, and the city would receive $4 million from Harrah’s. The other $12 million came from the sale of 30-year revenue bonds, which Harrah’s needed to pay off if the casino grossed $400 million per year. The establishment of a land-based casino in New Orleans divided the state legislature. Legislators who supported Edwards defended the casino, whereas the governor’s adversaries opposed the establishment of a casino commission that Edwards controlled. The restaurant and hotel industries believed a casino with restaurants and hotels would cut significantly into 800 URBAN AFFAIRS REVIEW / July 2004 their businesses. A concession allowed the casino to operate a 250-seat buffet and standing-room-only dining kiosks but prohibited sit-down dining or a hotel at the casino (Mowbray 2001). Opening the Land-Based Casino: Governor Foster and the New Orleans Development Regime Following the passage of the land-based casino legislation in 1992, a temporary casino opened in the city’s municipal auditorium on May 1, 1995, but its first month’s revenue of $11.2 million fell far short of the estimated $33 million per month earnings. In the middle of August 1995, the casino laid off 500 of its 3,000 employees and closed 20% of the temporary casino (Sizing up ’96 1996). Harrah’s filed for Chapter 11 bankruptcy, closed the temporary casino, and stopped construction on the permanent gaming hall on Thanksgiving eve of 1995. Louisiana voters elected Republican State Senator Murphy J. “Mike” Foster (1996-2004) as governor in the fall of 1995. Because he declined to run again, Edwards ended his involvement when he announced in December that all casino matters were deferred to Foster’s transition team. Without Foster’s authority and leadership, the New Orleans casino would have remained closed. His first steps, however, were unsuccessful. In 1997, he brought a renegotiated deal to the legislature but it was rejected. The Senate split 19 to 19 on this issue, whereas the House lacked the votes necessary to debate the revised contract. In March 1998, Governor Foster called a special session of the state legislature to reconsider the renegotiated casino contract. When he again lacked the necessary votes, Foster bypassed the legislature and presented the casino contract to the Louisiana Gaming Control Board. To sidestep the legislature, Foster cited a 1996 state law that allowed the new Louisiana Gaming Board “to renegotiate the provisions of any casino operating contract of a casino that is voluntarily or involuntarily placed in bankruptcy” (Louisiana Gaming Control Law 1996). The state legislature claimed the deal was new and consequently needed its approval. The Gaming Control Board passed Foster’s measure by a seven-to-one vote, and the state’s attorney general concluded that the board could approve the deal, which he considered a revision of the earlier contract. In response to lawsuits filed by two state senators to allow the state legislature to vote on the casino contract, the Louisiana Supreme Court ruled in favor of Foster. Mayor Morial actively facilitated the opening of Harrah’s Casino. He renegotiated Harrah’s lease on two occasions. In 1996, the city council voted five to two in favor of a scaled-down casino (Schleifstein 1996). Two years Burns, Thomas / NEW ORLEANS GOVERNORS 801 later, it unanimously passed a new lease that requires Harrah’s to pay $750,000 rent per month until November 1, 1999, when the casino would give a $1 million monthly fee to the city regardless of whether the gaming hall was operational. The chamber of commerce publicly supported the governor’s efforts to revise the Harrah’s contract. It consistently argued that the state and the city should not pass on the jobs and revenues promised by the casino. The Casino Tax Break: Governor Foster Continues His Involvement in the New Orleans Development Regime After getting the casino open, Governor Foster’s involvement continued to ensure that Harrah’s would remain in operation. In August 2000, the New Orleans Regional Chamber of Commerce asked the governor to cut Harrah’s $100 million annual payment because the casino contributed more than $80 million in payroll and benefits into the regional economy (Sayre 2000). Previously, Foster refused to provide a tax break to Harrah’s, but at this stage he was unwilling to lose jobs and the entire $100 million annual payment. The governor and Harrah’s negotiated a three-year contract that saw the state receive $60 million the first year and $50 million the next two years or 21.5% of gaming revenues, whichever was higher. By framing the issue as a contract renegotiation, Foster could send the contract to the Gaming Control Board for approval and then need only a majority (not the two-thirds required for a tax increase) approval in the legislature. Foster linked a teacher pay increase to the casino contract, adding the support of the teachers unions to the already formidable casino lobby. Faced with these two forces, as well as the governor, the legislature passed the tax relief legislation, with the House voting 64 to 36 and the Senate voting 23 to 16. Harrah’s revenues paid in part for the teachers’ $2,160 salary increase. In 2001, Mayor Morial renegotiated the casino lease so that Harrah’s would pay $5 million less in annual payments to the city, and the city council approved changes to zoning ordinances for Harrah’s hotel and expanded food services. In defense of the renegotiated deal, Morial said, Harrah’s status is “not an issue of gambling but an issue of economic development and business. We cannot look those (2,800) people square in the face if we do not do what is necessary to protect those jobs” (Gyan 2001). In return for these concessions, Harrah’s agreed to increase the percentage of revenue it allocated to the city. Several state legislators opposed the move to keep Harrah’s in business. Many argued that casino revenue constituted a risky way to manage state 802 URBAN AFFAIRS REVIEW / July 2004 funds because Louisiana would amass an insurmountable budget deficit if the casino went bankrupt. Others contended that the tax increase required a supermajority approval from the state legislature. Despite this opposition, the regime remained focused as it moved toward its goal while it efficiently utilized its available resources. NEW ORLEANS ACQUIRES AN NBA FRANCHISE At the same time the governor and other regime members initiated the land-based casino in New Orleans, they also pursued a professional basketball team for the city, expanding the governor’s important role in the New Orleans development regime. In the spring of 2001, a coalition of Governor Foster, his chief of staff, Mayor Morial, MetroVision, and other businesses attempted to convince the owner of the Vancouver NBA franchise to move his team to New Orleans (for a list of the winners and losers of the deals associated with bringing an NBA team to New Orleans, see Table 2). The New Orleans Arena, which the state financed and built, made the city the initial frontrunner to secure the team. The Vancouver team moved to Memphis partly because that city’s national corporate sponsors, including FedEx and AutoZone, agreed to finance the team, whereas New Orleans lacked these private resources. In the fall of 2001, voters in Charlotte voted against building a new basketball arena, and New Orleans gained a second opportunity to attract an NBA franchise. To bring an NBA team to New Orleans, the governor, with the assistance of the state legislature, provided selective benefits to the tourism industry, the New Orleans Saints football team, and the owners of the Hornets. The tourism industry and the Saints argued that the state needed to concentrate on existing businesses before it recruited new companies. The tourism industry wanted the state to finance an expansion of the city’s convention center. The Saints asked the state for a guaranteed revenue stream, funds to improve the Superdome, and an indoor training facility. The team threatened to move to Mississippi if the state failed to make these concessions. The governor called a special session of the state legislature to meet the demands of the tourism industry, the Saints, and the owners of the Charlotte basketball team. At the governor’s urging, the state legislature passed several measures that (1) increased New Orleans’ hotel-motel tax by 1 percentage point and raised the city’s food and beverage tax from 9.5% to 9.75% to help finance expansion of the convention center; (2) allocated $6.5 million from the state surplus to build the Saints a new training facility and $10 million to expand the luxury box suites, locker rooms, and concession areas in the New Orleans Arena for the new basketball team; (3) paid the Charlotte team’s Burns, Thomas / NEW ORLEANS GOVERNORS 803 TABLE 2: Winners and Losers of Various Deals Associated with Bringing a National Basketball Association (NBA) Franchise to New Orleans Winners New Orleans Saints football team Owners of the Charlotte/New Orleans Hornets NBA team Selected Benefits The governor and state legislature spend $6.5 million from the state surplus to build a new training facility for the Saints. The New Orleans delegation to the state legislature agrees to reallocate millions annually to the Saints. The governor and state legislature spend $10 million to expand the luxury box suites, locker rooms, and concession areas in New Orleans Arena for the new basketball team. The state legislature and governor approve and sign a measure to pay the Charlotte team’s moving expenses, which totaled $1.75 million. The state legislature and governor endorse a measure to allow the basketball team to receive up to $3.6 million in state tax credits. The state agrees to give all revenue generated from premium seating, advertising, arena-naming rights, concessions, souvenirs, and parking to the Hornets. The New Orleans delegation to the state legislature reallocates millions annually to the Hornets. The chamber of commerce and MetroVision purchase the most expensive tickets and buy corporate sponsorships for New Orleans Hornets basketball games. City agrees to build a $6.5 million training facility for the Hornets. The Hornets pay $50,000 to MetroVision each time this organization brokers a sellout. George Shinn, majority owner of the hornets, contributes at least $10,000 annually to MetroVision and serves on MetroVision's executive committee. The basketball team pays at least $1 million in rent to the state, and it could generate thousands of jobs. Losses Governor and state legislature increase New Orleans' hotelmotel tax by one percentage point and raise the city's food and beverage tax from 9.5% to 9.75% to help finance expansion of the convention center. Residents lost millions in education, economic development, and tourism projects as a result of deals to bring an NBA team to New Orleans. MetroVision State government Losers Tourists Residents of New Orleans 804 URBAN AFFAIRS REVIEW / July 2004 moving expenses, totaling $1.75 million; and (4) allowed the basketball team to receive up to $3.6 million per year in state tax credits for bringing highquality jobs to Louisiana. All of these measures enjoyed comfortable voting margins in the legislature. Finally, the governor agreed to give all revenue generated from premium seating, advertising, arena naming rights, concessions, souvenirs, and parking to the Hornets. Before the commencement of this special session, the New Orleans delegation to the state legislature received a portion of the New Orleans hotel-motel tax to fund various education, economic development, and tourism projects in the city. The New Orleans delegation agreed to reallocate this money so the Saints and the city’s new NBA team could receive approximately $8 million in guaranteed annual revenue. The city’s business and political leaders used their resources to attract an NBA team to New Orleans. The chamber and MetroVision purchased the most expensive tickets and bought corporate sponsorships. In exchange for the assistance of these business leaders, the Hornets agreed to pay $50,000 to MetroVision each time this organization helped broker a sellout. George Shinn, majority owner of the Hornets, contributes at least $10,000 to MetroVision and serves on this organization’s executive committee. Mayor Morial and the city council also committed resources to attract an NBA team. Under Morial’s guidance, the city agreed to build a $6.5 million training facility for the Hornets. Many state legislators outside the New Orleans area opposed the deal the governor negotiated with the owners of the Hornets. They disliked the governor’s favoritism toward New Orleans. Others endorsed the move of an NBA team to Louisiana as long as the New Orleans area, and not the rest of the state, financed these various deals. Other members of the legislature wanted the state to provide more resources to education, state employees, and health care instead of offering tax breaks and revenue to the already wealthy owners of an NBA team (DeSlatte 2002; Anderson 2002a). NEW ORLEANS’S COOPERATIVE DEVELOPMENT REGIME The New Orleans governing coalition maintained relative stability, despite disagreements among regime members, through two gubernatorial and two mayoral administrations. In each of these economic development projects, governors, mayors, and the chamber of commerce worked together to achieve mutually beneficial goals. This method of coproduction, a characteristic of urban regimes, was broad and sustained. Two governors concentrated on economic development in New Orleans to create local benefits. The governors’ involvement in the Burns, Thomas / NEW ORLEANS GOVERNORS 805 regime went beyond altruism. It was in the political self-interest of the governors to participate in the regime. Economic development is critical to a development regime, and in this study we found that the two governors were crucial to the realization of major economic development. Whether governors constitute members of the New Orleans regime is debatable. However, at the very least, they made up part of a policy-specific coalition that focuses on economic development.2 GOVERNORS AND THE PROGROWTH REGIME IN NEW ORLEANS WHY GOVERNORS INCREASE THEIR PARTICIPATION IN THE PROGROWTH REGIME This work supports Turner’s (1990) assertion that authority, finances, and politics affect state involvement in urban affairs. It expands on Turner’s point by explaining how structural conditions and the political predilections of Governors Edwards and Foster motivated these state-level actors to increase their participation in the New Orleans development regime. The governors became important actors within the regime partly because they wanted to facilitate the movement of New Orleans from a caretaker regime to more of a development regime. The loss of many private business leaders slowed the city’s transition to a corporate regime. Governors assumed important roles in the New Orleans casino and NBA franchise projects because the governors wanted to reap the economic and political benefits a progrowth regime could provide. Political self-interest, the availability of resources, state-level authority, and opportunity all led to the introduction of governors into New Orleans’s governing regime. Governors filled the resource and leadership vacuums created by business and employment losses in New Orleans and cuts in federal aid. Levels of public and private resources available in the city affected governors’ decisions to increase their participation in a progrowth regime. As gas and oil businesses left New Orleans and federal aid declined, the city lacked private leadership and resources capable of creating and sustaining large-scale development projects. Consequently, the governors took a more active role in the New Orleans development regime, providing direction and finances necessary for urban economic development. Political gains beyond satisfying the electorate also motivated the governors to actively engage the New Orleans development regime. In spite of evidence that gambling failed to attract tourists and caused fear among tourism- 806 URBAN AFFAIRS REVIEW / July 2004 related businesses in New Orleans (Ryan and Speyrer 1997), Foster pushed vigorously for the completion of the Harrah’s project because the unfinished casino presented a public image of state government’s incompetence. Foster completed the project to ensure that the casino did not become a political liability. Harrah’s opened five days after the 1999 gubernatorial runoff election in which Foster garnered 62% of the total vote. The governors used their direct involvement in the New Orleans regime to improve the state’s image as a place to conduct business. Governor Foster argued that the inability to open the casino and renegotiate Harrah’s contract signified Louisiana’s failure to care about millions of dollars in contracts and private investment. He and Governor Edwards believed the acquisition of a professional basketball team increased New Orleans’s attractiveness to businesses. Economic competition with Mississippi also motivated the governors to expand their role in the New Orleans development regime. Edwards supported the casino project because he claimed that more than 60% of the patrons of Mississippi’s dockside casinos were from Louisiana. He also contended the land-based casino would stop the flow of millions out of the state (Gyan 1994). In reference to Mississippi’s use of gambling to generate income, Edwards said, “They’ve created over 15,000 jobs and last year, with just six months’ operation, they got $43 million more in revenue than they anticipated” (Aynesworth 1993). The governors also provided financial and infrastructure support to the New Orleans Saints football team to prevent its threatened move to Mississippi. Edwards and Foster participated actively in the New Orleans development regime to demonstrate their commitment to deal with the economic problems in Louisiana and New Orleans. They used their involvement in the New Orleans regime to claim credit for implementing programs that addressed the state’s economic problems. HOW GOVERNORS ASSUME AN IMPORTANT ROLE IN THE DEVELOPMENT REGIME Whereas various factors motivated the governors to participate in the New Orleans development regime, authority, resources, and leadership skills enabled governors to play significant roles in regime politics. These projects would not have moved forward without gubernatorial intervention because public and private local actors lacked the authority and finances necessary to complete these projects. Only state government possessed the authority to legitimize a land-based casino in New Orleans. Foster relied on his authority over the Louisiana Gaming Control Board to complete the casino and reduce Burns, Thomas / NEW ORLEANS GOVERNORS 807 Harrah’s payment to the state. He used special sessions of the state legislature to raise the revenues necessary to relocate the Hornets to New Orleans. As regime actors, Governors Edwards and Foster provided selective benefits to others to complete their policy initiatives. Governor Foster linked the revised casino contract to a pay raise for teachers to garner the backing of teachers unions. The governors provided money and infrastructure support to the Saints, the Hornets, and the tourism industry to move an NBA team to New Orleans. Louisiana governors allocated more than financial resources to the progrowth regime in New Orleans. As these cases illustrate, Governors Edwards and Foster and their representatives used their authority and power to participate directly in each phase of the casino and NBA team projects. Louisiana governors used exaggerated claims about the benefits of these projects to convince voters to support the casino, arena, and professional basketball team projects. Like most regime members, Foster convinced other coalition actors, including the mayor, that the time was right for the city, the state, and the region to support an NBA team. For instance, Stephen Perry, Foster’s chief of staff, argued that the Hornets and other economic development projects signaled “an economic renaissance for the city of New Orleans and the state of Louisiana” (Anderson 2002b). WINNERS AND LOSERS IN THESE DEALS Governors, New Orleans mayors, the New Orleans Regional Chamber of Commerce, the tourism industry, and the owners of the casino, the Hornets, and the Saints constituted the biggest winners of these deals. By claiming credit for addressing the problems in the state and the city, governors and mayors benefited from their participation in the New Orleans development regime. The casino allocates at least $60 million in annual revenue to the state, and it employs more than 2,400 people. The basketball team will pay at least $1 million in rent to the state, and it could generate thousands of jobs. The owners of the casino received a significant reduction in the money they paid to the state, and they gained the ability to increase restaurant services and connect a hotel to the casino. In addition, the Hornets basketball team, the Saints football team, and the convention center received revenue or inkind contributions, including state-of-the-art facilities, from the development regime. Tourists, working-class and poor residents, the state legislature, and the state’s business reputation lost in these various deals. Funds to expand the convention center and increase revenues to the Saints came from increased taxes on tourists and residents. New Orleans’s residents lost special-project dollars, previously used for improvements to schools in poorer sections of 808 URBAN AFFAIRS REVIEW / July 2004 the city, when the state legislature redirected those funds to provide a guaranteed revenue stream to the owners of the Hornets and the Saints. Furthermore, the casino deal generated fewer jobs for working-class and poor residents than political and business leaders predicted. The state Gaming Control Board’s ability to supersede the legislature in the casino deals increased gubernatorial power and decreased the state legislature’s capacity to shape public policy. In the delicate power balance between governors and legislatures, the exclusion of the state legislature in crucial business deals sets dangerous a precedent for future chief executives. The casino deals also damaged Louisiana’s business image by failing to generate predicted employment. Governors and some state legislators held contrasting positions over the economic development process. The state legislature wanted formal consideration and deliberation on various issues. By contrast, governors elected to avoid checks and balances in favor of executive approval of these projects. In each of these aforementioned conflicts, governors’ views prevailed over those of the state legislature. The large size and deliberative nature of the state legislature made it difficult for this branch of government to initiate and negotiate economic development projects. Governors served as state government’s representatives in the urban regime partly because they possessed the power of initiative and the ability to bypass the legislature. GOVERNORS, URBAN REGIMES, PUBLIC POLICY Scholars should consider all actors with the resources, authority, and motivation to join urban regimes because the interaction between coalition actors shapes public policy. Regime theory does not identify important members of urban governing coalitions because it focuses on local and even regional actors. Governors often maintain the financial and institutional resources and the political motivation necessary to assume important roles in urban development regimes. Increased gubernatorial involvement constitutes a distinctive regime type when cities pursue policies because governors provide finances, authority, and leadership to them. In New Orleans, governors met the threshold for regime membership. They engaged in sustained and systemic relations with local actors in key development programs. We found a high level of commitment to the regime on the part of the governors, visible in their continual activity and presence at the local level. The governors were attractive additions to the regime because they commanded resources and political power that could be utilized to achieve desired outcomes. Burns, Thomas / NEW ORLEANS GOVERNORS 809 Without rigorous analyses, it is difficult to determine when gubernatorial participation makes a difference to regime politics. An examination of development policies in New Orleans reveals that gubernatorial leadership in addition to authority and finances made it possible for the city to build a casino and attract an NBA franchise. For example, one governor initiated the landbased casino in New Orleans, two governors ensured that the Gaming Control Board authorized the land-based casino in New Orleans, and Louisiana governors provided the financial resources necessary to attract an NBA team to the city. Without this leadership, authority, and financial support, these development projects could not have been realized. As the study of urban regimes continues, we suggest that researchers remain open to the possibility of extralocal regime members. More generally, it is possible to anticipate the introduction of extralocal players into local regimes when these actors can pursue actions that are in their self-interest, when they maintain control over critical resources, and when those actions can be achieved through the coproduction of power within the local regime. Extralocal actors assume important roles in local regimes when they command scarce and critical resources, perceive regime membership as in their interest, and are amenable to the coproduction of power in the local setting. To determine when governors assume important roles in urban regimes, analyses need to account for structural conditions and political motivations. Diminished private capital and leadership at the local or state levels constitute structural conditions that create an opportunity for increased gubernatorial involvement in urban regimes. As cities clamor for selective benefits, especially fiscal support from the federal government, the absence of vital resources weakens traditionally constituted regimes. Stepping into this vacuum, state-level actors, especially governors, gain admission to urban governing coalitions. Governors’resources, state-level authority over municipalities, and a shifting universe of capacity and constraints lay the groundwork for a new form of urban regimes. Governors do not increase their activity in urban regimes because they must. Instead, they take on important roles in urban regimes because they choose to. They assume greater roles in urban regimes to advance themselves politically and personally, address economic crises, or add resources to the state’s coffers. These political motivations and others like them convince governors to seize opportunities to increase their direct involvement in local regimes. The identification of these fluid, political motivations makes it difficult to identify when governors will increase their activity in urban regimes. Scholars must examine these motivations if they are to understand when governors choose to increase their involvement in urban regimes, and may also turn to a normative analysis of gubernatorial regime membership. 810 URBAN AFFAIRS REVIEW / July 2004 NOTES 1. MetroVision, an arm of the chamber of commerce, operates a public-private partnership in 10 parishes in southeastern Louisiana. It attempts to attract economic development to the region, in general, and New Orleans, in particular. 2. For more on policy-specific coalitions, see Stone (2003). REFERENCES Agranoff, R., and M. McGuire. 1998. The intergovernmental context of local economic development. State and Local Government Review 30 (3): 150-64. Anderson, E. 2002a. New Orleans issues top session agenda: Saints, Hornets, industry, tourism bills in busy call. 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Press. Whelan, R. K., A. H. Young, and M. Lauria. 1994. Urban regimes and racial politics in New Orleans. Journal of Urban Affairs 16 (1): 1-21. Wolman, H. 1988. Local economic development policy: What explains the divergence between policy analysis and political behavior? Journal of Urban Affairs 10 (1): 19-28. Zimmerman, J. F. 2001 Partnership government: State-local relations. Spectrum: The Journal of State Government 74 (summer): 9-13. Peter F. Burns is an assistant professor of political science at Loyola University, New Orleans. He is working on the final revisions to his book, Electoral Politics Is Not Enough. His current research concentrates on state takeovers of education in Compton, California; Hartford, Connecticut; and Newark, New Jersey. The Journal of Urban Affairs, Social Science Quarterly, and Political Science Quarterly, among others, have published his research. Matthew O. Thomas is an assistant professor of political science at California State University, Chico. His research interests include urban politics and policy, police administration, and community policing. He previously served as a research consultant for the Urban Institute, where he participated in an analysis of reform and reorganization in the Metropolitan Police Department, Washington, D.C, and authored several reports for the National Institute of Justice.
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