Another step forward for major ExxonMobil expansion as Baton Rouge council OKs tax exemption
ExxonMobil cleared another obstacle Wednesday night in its effort to secure a multi-million-dollar property tax break for a proposed expansion when the East Baton Rouge Parish Metro Council voted unanimously to reduce the project’s tax liability for 10 years.
In a separate but related item, the council delayed voting on whether to establish guidelines that will weigh into future decisions the council makes on Industrial Tax Exemption applications — which could settle ongoing reservations that groups like Together Baton Rouge have with how tax breaks are handled.
Before the panel took up ExxonMobil’s tax cut request Wednesday, Councilman LaMont Cole said he and Councilman Matt Watson were working to develop standards for future exemptions.
“Now people may not agree with them, but they can live with them,” he said. “In the meantime, we have to send a message to the world that Baton Rouge is place to be.”
In order to do that, representatives from the city, parish and state’s economic development arena told the council that giving ExxonMobil the tax break on its proposed polyolefins plant expansion was the only way to keep the energy company from investing up to $1 billion elsewhere.
ExxonMobil’s request has already sailed through the state’s Board of Commerce and Industry and East Baton Rouge Parish School Board. Last month, it picked up support from Sheriff Sid Gautreaux.
Gov. John Bel Edwards, Mayor-President Sharon Weston Broome and the Baton Rouge Area Chamber have endorsed ExxonMobil’s tax break request as well.
The Metro Council was the last local taxing authority which could have thrown a wrench in the exemption’s approval, if enough council members had opposed it.
But on Wednesday nearly everyone on the Metro Council praised the energy company for its investments in the community over the years, echoing sentiments that a parade of ExxonMobil employees shared with the council in their own impassioned pleas.
“I’m so glad to see there is so much support here; from a variety of people,” Watson said. “This sizable investment in our community is not only going to protect what we have now, but the economy we’re going to leave for our children.”
The polyolefins plant expansion, which ExxonMobil previously said would require between $500 million to $1 billion to bring online, involves the petrochemical giant’s first tax break request under new state guidelines for the decades-old Industrial Tax Exemption Program.
ExxonMobil plans to begin construction on the polyolefins complex on Scenic Highway in north Baton Rouge in early 2019 and complete work by 2021. The 10-year tax abatement would start in 2021 and end in 2031.
ITEP is designed to give manufacturers a break on their property taxes on new capital expenditures.
According to previous reports, only $335 million of the estimated project costs qualifies for the ITEP.
ExxonMobil’s tax break would be worth $5.7 million in the first year, and the firm would pay 20 percent property taxes for a decade. The company said it would pay $6.9 million in property taxes over the life of the 10-year exemption, along with $32 million in sales taxes.
And the company said the project would create 45 new direct jobs, 20 permanent contractor jobs and 600 construction jobs at peak development.
The group Together Baton Rouge has been one of the most outspoken critics of ITEP and other issues related to tax assessments involving ExxonMobil’s facility, which the city-parish’s park’s system had claimed was too low before dropping its objections.
But a new challenge to ExxonMobil’s property assessment popped up Monday when members of the Louisiana Association of Educators filed a lawsuit against East Baton Rouge Parish Assessor Brian Wilson. TBR and the teachers union claim $338 million worth of property was left off the parish’s tax rolls. If left uncorrected, the groups say local taxing bodies will miss out on $5 million in revenue.
Wednesday night, TBR representatives criticized the Metro Council’s decision.
Edgar Cage, a lead organizer with Together Baton Rouge, said the organization has issues with government entities doling out large tax breaks to ExxonMobil without standards or protocols in place to penalize the company if it doesn’t reach the revenue projections in their project proposals.
“The contract as drafted does not require that the public revenue projections actual come to pass,” Cage told the Metro Council. “If in five years the property has depreciated much more quickly than these projections, and turns out there will be no value once exemptions runs it course, this contract gives this Metro Council no recourse.”
“But isn’t that what LaMont is working on?” Councilwoman Chauna Banks said later. “I agree with the stricter standards and the need for accountability (but) it has my support because I haven’t been given anything for a reason not to.”
Cole said he and Watson are consulting with Together Baton Rouge as well as the Baton Rouge Area Chamber and other entities on the guidelines and expects to present them to the Metro Council at its next meeting.