KEY TAKEAWAYS: A BGR report finds 37% of New Orleans’ real estate assessed value, totaling $2.74 billion, was exempt from property taxes in 2025. Taxing all exempt real estate at 2025 rates could have generated approximately $316 million in additional annual revenue, according to BGR estimat es. Government-owned property accounts for $1.5 billion in exempt assessed value, while nonprofit properties represent another $624 million. BGR recommends infrastructure fees and greater tax exemption oversight as New Orleans faces potential drainage funding shortfalls beginning in 2027.   More than a third of New Orleans’ real estate assessed value is exempt from property taxes, representing $2.74 billion in property value and placing additional financial pressure on residents and businesses that pay taxes, according to a new report from the Bureau of Governmental Research. The independent public policy research organization released its report, “Off the Rolls: Managing the Impacts of Tax-Exempt Property in New Orleans,” on Nov. 5, finding that 37% of the city’s $7.48 billion in real estate assessed value was exempt from taxation in 2025. The report estimates that local governments could have collected approximately $316 million more annually if all exempt real estate had been taxed at 2025 rates. Alternatively, if tax collections remained unchanged, the overall property tax rate could have been about 32% lower because the burden would have been distributed across a larger tax base. BGR emphasized that the estimates illustrate the financial effects of exemptions rather than suggest all exempt properties should be taxed. The findings come as New Orleans faces significant infrastructure funding challenges, including the potential expiration of a drainage property tax in 2027. “Many exemptions serve important public goals, and this report is not a call to tax all exempt property,” said BGR President and CEO Rebecca Mowbray. “But when more than a third of the city’s real estate value is off the tax rolls, the residents and businesses that do pay property taxes carry a greater share of the cost. With a key drainage tax set to expire in 2027, City leaders have an opportunity to make sure owners of tax-exempt property help support the services and infrastructure they rely on.” Property taxes generate approximately half of all local tax revenue in New Orleans, supporting public safety, schools, drainage, levees and other government services. The report identifies four major categories of exempt real estate. Government-owned property accounts for approximately $1.5 billion in assessed value, or 20% of the city’s total. Nonprofit-owned property represents $624 million, or 8%, while homestead exemptions account for $492 million, or 7%. Development incentives remove another $127 million, or approximately 2%, from the tax rolls. Government property represents about 55% of the city’s total exempt real estate assessed value. Despite the substantial amount of exempt property, the city’s tax base has improved considerably over the past three decades. BGR’s previous study in 1996 found that 65% of New Orleans’ real estate assessed value was exempt from taxation. That share has declined to 37%, largely because of growth in taxable property values following Hurricane Katrina, changes in assessment practices and efforts to return blighted properties to productive use. The number of fully exempt properties, excluding homes receiving homestead exemptions, also declined nearly 30% between 2011 and 2025, falling from 14,566 to 10,307 parcels. However, BGR said the remaining concentration of exempt property continues to constrain local government revenue and shift costs to taxable property owners. The report also examined property tax exemptions across six Southeast Louisiana parishes. When business equipment and utility property are included in the overall tax base, approximately 33% of New Orleans’ assessed property value is exempt. That represents the second-highest percentage among the six parishes studied, behind Ascension Parish at 39%. Jefferson Parish’s exempt share was 25%, St. Tammany Parish’s was 21%, East Baton Rouge Parish’s was 20% and St. Charles Parish’s was 26%. BGR also identified problems with how exempt properties are valued and reported. Louisiana does not maintain a statewide database of tax-exempt property, and parish assessors use different approaches to recording and updating valuations. During its research, BGR identified two errors in Orleans Parish assessment records that had inflated the reported value of exempt real estate by $721 million. The Orleans Parish Assessor’s Office subsequently corrected the errors. The organization said more consistent reporting and periodic evaluations would help policymakers determine whether exemptions are delivering sufficient public benefits to justify their financial costs. Among its recommendations, BGR urged New Orleans officials to develop a fair and transparent infrastructure fee proposal by 2027 that would allow tax-exempt property owners to contribute to services such as drainage. Unlike traditional property taxes, certain infrastructure fees can apply to both taxable and tax-exempt properties, potentially spreading the costs of maintaining public systems among more property owners. The recommendation comes as the city’s drainage system faces uncertainty over its long-term funding. BGR estimates that 60% of the drainage system’s existing revenue could be at risk if one of three drainage property taxes expires in 2027 and another expires in 2031. The organization said maintaining adequate drainage funding likely will require a combination of new fees and extensions of existing property taxes. BGR also recommended that the Louisiana Legislature establish standardized statewide reporting requirements for exempt properties, require periodic reviews of exemptions’ benefits and costs, and mandate fiscal analyses before approving new or expanded exemptions. Additional recommendations include stronger oversight of development-related tax incentives, consistent property valuation standards among parish assessors and identifying underused city-owned properties that could be returned to productive use. Changing existing property tax exemptions presents a significant legal challenge because many are protected under the Louisiana Constitution. Amendments generally require approval from two-thirds of the Legislature and a majority of voters. The report also acknowledges that tax exemptions can provide important economic and community benefits, including supporting nonprofit hospitals, universities, religious organizations, public facilities and development projects. BGR said those benefits should be weighed against the revenue local governments forgo and the resulting tax burden on other property owners. The organization urged state and local officials to prioritize reforms ahead of the 2027 legislative session and upcoming decisions about drainage funding. Founded in 1932, the Bureau of Governmental Research is an independent nonprofit organization that analyzes public policy and government spending in the Greater New Orleans area. The full report is available at BGR’s website. ...read more read less