Bang for the buck?
Tellurian ‘had very good read’ on local application outcome
Despite a local, elected voice now taking part in Louisiana’s Industrial Tax Exemption Program approval process, the Southwest Louisiana Economic Development Alliance is familiar with trying to attract business and industry to the region.
Serving as “the voice of business” in Southwest Louisiana, George Swift, alliance president and CEO, said one of its main goals is to fuel industrial growth in the region. Before local governments had a legal say in the process of approving ITEP applications, Swift said the alliance would vet a potential project’s success by working “primarily with the State Department of Economics and the (Louisiana Board of Commerce and Industry).”
After Gov. John Bel Edward’s 2016 executive order reverted approval power to local taxing entities, Swift said the alliance continued to be involved with the process because of its history with ITEP decisions.
“It was only natural that we work with the industry, with (Louisiana Economic Development) and with local entities,” Swift said.
Elected and appointed heads of local government agree with the alliance’s seat at the table of the Calcasieu Parish Tax Authority. Calcasieu Sheriff Tony Mancuso applauded the alliance, calling its employees “true experts” in economics.
Karl Bruchhaus, Calcasieu School Board superintendent, said the parish is “fortunate” to have a harmonious group of experts in the tax authority working for its benefit. Bryan Beam, Calcasieu Parish administrator, said the group’s unity is “advantageous from a business perspective.”
Swift said Southwest Louisiana’s economy thrives because of industry, whose presence here can largely be attributed to the state’s ITEP.
“If we don’t have these incentives, we’re not going to have the industry that creates jobs,” he said.
There are $44 billion in industrial projects currently underway. Meanwhile, another $65 billion worth of announced projects will likely look to take advantage of the tax exemption program.
The competitive nature of industrial projects creates a perpetual sense of urgency, and even tenacity, within conversations concerning the program’s local application.
“We’re in a highly competitive market,” Richard “R.B.” Smith, alliance vice president of business and workforce development, said. “They don’t think there’s something special about Southwest Louisiana. If you don’t compete with Texas to do the same thing, you’re not going to stay in the game.”
During an industry’s site selection process, selection committees analyze several factors. They include property available, education and workforce development and infrastructure.
“Everybody’s got those things,” Smith said.
Smith added that industries go even further, asking “What else can you do to help incentivize me coming to your community?” Because of this, the state’s ITEP was created to be the final piece of the puzzle for prospective industries.
Historically, industrial tax exemptions have been granted at a nearly guaranteed 100 percent rate, without any say from local elected officials.
After the governor’s executive order, locals had the authority to construct their own terms and percentages. However, it varied the landscape considerably for prospective industries looking to cash in on the state’s previously generous policies.
Jason French, vice president of governmental affairs for Tellurian, said the new policies made the state’s incentives similar to other states — a true change for the company whose CEO and management team previously worked for Cheniere Energy.
“We had a very good read on what was available in Louisiana based on past work experiences of the team,” French said.
Cheniere joined Southwest Louisiana’s industrial landscape in 2010 through a lucrative industrial tax exemption in Cameron Parish.
Local entities, including the Police Jury, School Board and Sheriff’s Office, made decisions regarding the specific terms and conditions for Driftwood LNG in November. But French said Tellurian, Driftwood’s parent company, “made much of the choice on the selection (site) back when we filed and formalized in March of 2017.”
According to French, Tellurian searched from “Brownsville, Texas, up to the coast of Maine” before narrowing its search down to Texas and Louisiana. Southwest Louisiana ultimately won the competition, “with the assumption that we would be granted the type of ITEP of similar industrial exemptions granted in the past,” he said.
Because the executive order was in place before Tellurian filed its advance notice on June 29, 2016, elected officials could choose an exemption ranging from zero to 100 percent. When questioned on how the company could be sure it received an incentive similar to Cheniere’s, French said, “We have been having discussions with the local taxing entities since the project was announced. We’ve had those conversations.”
French said the focus was not solely on getting a 100 percent exemption, but rather “on the importance of maximizing the value of the incentive.”
French said transparency between Tellurian and local officials has always been the primary goal in the ITEP application process.
“We as a company routinely interact with any of the elected officials across the parish,” he said. “Certainly they were aware, and we said we were available to answer any questions. We are very open and transparent with officials.”
However, very few elected officials interviewed by the American Press said they knew anything about the terms of the agreements and even who French was. According to the Calcasieu Parish Taxing Authority’s rules, elected officials are not allowed in the closed door staff meetings.
Along with the authority’s appointed members, representatives of prospective industries may also be invited to the meetings for informational purposes. But Wilfred Bourne, CPSB chief financial officer and taxing authority member, said, in this instance, Driftwood was not requested to attend the meeting because of the taxing authority’s familiarity with the process, having vetted three prior applications.
Working “regularly with the Police Jury,” with CPSB through “philanthropic” efforts, and with Sharon Cutera, CPSO CFO, at Mancuso’s request, French said he has diligently respected the approval process established by the Calcasieu tax authority and later approved by elected officials.
“The School Board, the Police Jury and the sheriff set up and voted on a process that they wanted companies to follow,” he said. “Out of respect for that process, I worked through the staff, and this process is now being set up as a model for the rest of the state.”