reprinted from:

Civil District Court Judge Terri Love accepted the terms of a legal settlement between the RTA and leaders of the city's hospitality industry, opening the way for the tax to take effect as early as Aug. 1.

Love's action means the RTA will be able to satisfy the demands of the Federal Transit Administration, which set a June 30 deadline for the local agency to show it can come up with its required 20 percent share of the streetcar project's estimated $156.6 million cost. The federal government has pledged tens of millions of dollars to the project.

The RTA first sought to impose the tax on hotels last year, but hotel officials and tourism leaders sought to block it, citing an exemption for hotels and motels that voters approved when they authorized the RTA to levy a 1-cent sales tax in 1985. The RTA said the exemption was illegal.

In February, Mayor Marc Morial brokered an agreement between the sides to use part of the tax revenue for tourism-related purposes. Despite some tourism leaders' continuing doubts about the legality of the tax, the industry agreed in early May to let it go into effect.

Under the settlement Love accepted, the $7 million or more that the tax is expected to generate annually will be shared among the RTA, which will use the money for the Canal Street line and other light-rail projects; the New Orleans Tourism Marketing Corp., which will expand its programs to market New Orleans to potential visitors; and a trust fund for New Orleans' share of the cost of an expected fourth phase of the state-owned Ernest N. Morial Convention Center.

Barring delays, preliminary construction on the streetcar project will begin this year. Streetcars could be running along Canal Street's 4.1-mile length, from the river to City Park Avenue, by late 2003.

RTA officials had hoped to impose the tax in July, but they agreed to a request by hotel leaders to delay collection until Aug. 1. The annual Essence Festival set for the first week of July is expected to draw tens of thousands of visitors, many of whom already have booked rooms, and hotel officials asked that the tax take effect after the event.

First-year revenue from the tax won't be enough to meet the RTA's financial obligation to the federal government, but officials said the removal of all legal impediments clears the way for the agency to borrow as much as it needs for the Canal streetcar and other light-rail projects.

On Thursday, the RTA board of commissioners voted unanimously to accept the terms of the "cooperative endeavor agreement" negotiated with hotel industry officials and other tourism leaders.

The board also authorized its financial consultant to seek a line of credit from a state agency established by the Legislature to provide low- interest loans to local government entities. The RTA expects to secure a credit line for as much as $100 million, which officials said will prove to the federal government that the agency is capable of paying its $31 million share of the Canal project.