While the city-parish has struggled over the years to find money to increase pay for police and public works employees, as well as matching funds for drainage projects, it has managed to dole out small economic development grants each year to a handful of recipients.
The special fund, which in the 2021 budget includes $350,000 in grants for three recipients, as well as $360,000 for professional services contracts for city-parish lobbyists. The fund is designed as an incentive to encourage companies to invest or expand in the parish, according to officials with City Hall and the Baton Rouge Area Chamber, which has a $339,000 contract, paid from a separate fund, to serve as the city-parish economic development agency.
The incentives are offered only at the discretion of the mayor with approval from the Metro Council after vetting and analysis by BRAC, says BRAC President and CEO Adam Knapp.
In the 2021 budget, all three companies receiving the incentives were already well established in the market at the time the grants were offered. They recipients were:
• General Informatics, which is in the final year of a five-year, $100,000 annual grant tied to its corporate expansion and the development of its new headquarters, the $20 million @Highland mixed-use development, which enabled the creation of 96 new jobs with $5.3 million in new direct payroll.
• Oceans Behavioral Health, which is in year two of a 10-year $140,000 annual grant awarded to incentivize the company to expand at Howell Place in north Baton Rouge, with a $5.7 million capital investment and $3.4 million in new direct payroll.
• Lighthouse Louisiana, a 501c3 that receives $110,000 a year to help facilitate its social enterprise, cup-manufacturing facility in north Baton Rouge that employs 75 visually impaired workers with a $2 million payroll.
All three companies were recommended to receive the incentive because they were weighing whether to make a major investment in the market, says Knapp, who notes that the incentives are tied to specific job creation and have claw back provisions that require the recipient to repay the grant if they fail to meet benchmarks.
In the case of General Informatics, which has generated two spinoff companies and has been acquired by a Dallas private equity firm, the incentive helped tip the scales in favor of staying in Baton Rouge at a time when company founder Mo Vij was pondering a move to Raleigh, North Carolina.
“The city of Raleigh was actively recruiting us and everyone knew that,” Vij says. “They offered us much more money but it came down to going for the money or trying to make your dream work here. That’s what this helped us do.”
The special fund was also used to help entice IBM to locate its service center on the downtown Baton Rouge riverfront several years ago. The city-parish kicked in $1.5 million a year for three years, or a total of $4.5 million, between 2015-2018 as part of a joint incentive package with the state and LSU.
But the benefit of giving away city-parish money is less obvious in the case of some of the other recipients in recent years. Among them:
• Ameritas Technology Corp. received a $30,000-a-year, three-year grant from the city-parish in 2013, during the Holden administration, to cover its parking expenses.
• The Louisiana Municipal Association received $50,000, also in 2013, to host the 77th annual Louisiana Municipal Association conference held in 2014 in downtown Baton Rouge.
Knapp says Ameritas Technology was an economic development project that ultimately “didn’t make it,” though he doesn’t remember the details.
As for the LMA conference, he says BRAC did not recommend funding the event but that, perhaps, the request to help attract the conference came from Visit Baton Rouge.
City-parish officials say in the context of a $300 million general fund budget, some $350,000 in economic development incentive grants is insignificant, one-tenth of one percent.
“This is not some big pot of money or slush fund,” says Chief Administrative Officer Darryl Gissel. “It’s just for small grants that we give to companies that have been vetted by BRAC.”
But Metro Council member Dwight Hudson, a fiscal conservative and frequent critic of the administration, says while he believes economic development money is important to have in the budget, “we still need to do a better job of getting our priorities straight and having funding for our critical needs.”