The Orleans Parish School Board unanimously denied a local shipping company’s request for a tax break. It is the first such denial from the board, which has only recently been given the power to review industrial tax exemption requests.
Six board members voted to deny Bollinger Algiers’ application for an Industrial Tax Exemption, in line with school district administration’s recommendation. Member Sarah Usdin abstained.
The industrial tax exemption is the state’s most expensive tax break, costing local governments $13.7 billion in lost tax revenue between 2006 and 2016, according to The Advocate.
Even though the exemption affects local agencies by diverting some local property tax revenue away from them, industrial tax exemptions were approved by a state board, without local input, until 2016. But under two 2016 executive orders from Gov. John Bel Edwards, local agencies — such as school boards and police districts — can vote to keep their portion of the taxes.
The new ability has shifted the playing field and businesses have more agencies to consider when asking for the tax breaks. Proponents say it will hold businesses more accountable to their promises to local governments. Critics say it could make the state less competitive for attracting new businesses. It appears the first local agency to reject the tax break was the Caddo Parish Sheriff’s Office in February.
Earlier this year, with growing momentum across the state, school board member Ben Kleban proposed denying all ITEP requests. But that idea didn’t pass muster with other board members and the business community.
Earlier this week, a school board committee declined to weigh in on the Bollinger application, forwarding the item to the full board.
After that meeting, Quentin L. Messer, Jr., CEO of the New Orleans Business Alliance, said in a prepared statement that the process is working as the governor anticipated, with decisions being made at the local level.
“The challenge is to strike the balance between maintaining Orleans Parish economic competitiveness relative to neighboring parishes and allowing OPSB, the Sheriff’s Office and City of New Orleans to develop policies reflective of their stakeholders’ concerns and priorities,” he said.
The school board’s recommendation to deny the exemption was based on a set of standards that the school board approved over the summer. However, as part of that summer vote, the school board also agreed to defer to standards formally adopted by all citywide taxing bodies, including the city and the Orleans Parish Sheriff’s Office. That left Thursday’s vote in question.
The citywide standards have not been adopted yet. After Tuesday’s meeting, a spokesman for Mayor LaToya Cantrell told The Lens that until they are in place, exemption requests “should be allowed to move forward.”
The Mayor’s office did not respond to a request for comment after Thursday’s vote.
The request from Bollinger Algiers, a subsidiary of shipbuilding and vessel repair firm Bollinger Shipyards, did not meet two of the district’s four newly created requirements to secure an exemption, according to the notes in a board resolution to deny the exemption.
Applicants must meet all four requirements. But the Bollinger project is not in an economically “distressed region” as defined by the school district. And construction has already begun. The criteria require that projects cannot have started before getting approval for the tax exemption. It’s unclear what the project was.
The exemption has allowed eligible manufacturers to forgo all property taxes related to new facility improvements for up to 10 years. That was recently capped at 80 percent of property taxes for 10 years, but because Bollinger applied for the exemption before the rules changed, it is seeking a 100 percent exemption, emails from the company show.
The Bollinger request involves a small amount of money. The tax break would cost the city about $1,300 each year for the first five years and $3,000 each year after that, school district Chief Operating Officer Eric Seling said. But the schools’ share represents about 30 percent of the total value of the exemption.
The district did not provide an exact figure for its share.
The City Council and Orleans Parish Sheriff’s Office can also consider Bollinger Algiers’ application.