After recent scrutiny from the New Orleans City Council, Orleans Parish Assessor Erroll Williams told The Lens that his office plans to conduct a review of his records to verify that millions of dollars in property tax exemptions are current and valid.
Williams’ announcement comes after more than a month of repeated questions — from a local advocacy group, at least one council member and local media — about two multimillion-dollar properties that were listed as exempt from taxation in his 2020 property tax rolls, even though their state-issued exemptions expired in 2017.
During a presentation to a New Orleans City Council committee late last month, the advocacy group Together New Orleans accused Williams of failing to add $155 million in taxable business property to the property tax rolls, representing $10.5 million in uncollected tax revenue.
The group focused on businesses that had been granted property tax exemptions under the Industrial Tax Exemption Program, a state incentive program meant to boost industrial expansion and job growth by cutting local property taxes for manufacturers. The tax exemptions are granted for five years with the chance to seek approval for a second five-year term.
There were exemptions in New Orleans that had expired — in some cases several years ago, Together New Orleans charged — but the businesses were still not being properly taxed.
Following the Together New Orleans presentation, Williams insisted that all exemptions in his records were current, The Times-Picayune/New Orleans Advocate reported.
It’s not clear if Together New Orleans’ figures are accurate. But until last month, Williams’ records maintained that at least two expired exemptions — for properties owned by Folgers Coffee worth a combined $40 million — were still valid. Both had expired in July 2017.
In the weeks leading up to the meeting, he had gotten repeated inquiries from City Councilwoman Helena Moreno. And he’d been interviewed for a newspaper story that detailed how the properties lost their exemptions.
By mid-August, communications from Moreno’s office prompted Williams to seek clarification on the Folgers properties from the state, his office told The Lens.
After hearing back from the state, the Assessor’s Office told The Lens on August 30 that the Folgers properties would be taxed in 2020, expected to bring in an estimated $700,000 in revenue to the city and other taxing authorities. Williams also plans to collect back taxes on the properties from 2018 and 2019.
The confusion, Williams said, was the result of a policy in the Assessor’s Office of automatically treating all industrial tax exemptions as valid for 10 years, in effect assuming that they are all renewed for a second term. The Folgers properties, however, were never renewed beyond their first five-year term.
The apparent oversight raises the question of what would have happened to the exemptions without attention from the media, Together New Orleans and Moreno, and whether the assessor’s office has an adequate system for keeping track of the contracts, which cost the city, local schools, the Sewerage and Water Board and other tax-collecting agencies millions of dollars in foregone property taxes per year.
Orleans Parish Assessor Erroll WilliamsI’ll be the first to admit that, like any other governmental agency, we’re not perfect. But we’re not going to hide anything, that’s where we’re different.
Williams told The Lens that he doesn’t believe he has left any money on the table.
“Our system as of yet has not deprived tax recipient agencies their due nor given any undo breaks to industry,” he wrote in an email. “That said, I’ll be the first to admit that, like any other governmental agency, we’re not perfect. But we’re not going to hide anything, that’s where we’re different.”
He said his office plans to do “a comprehensive review to verify any exemptions we show are accurate.”
“I’m certainly pleased that our information was finally given appropriate attention, but I continue to be worried that these exemptions are not being proactively monitored,” Moreno said in an emailed statement.
‘Terminated retroactively’
As The Times-Picayune/New Orleans Advocate reported in July, Folgers was granted the two five-year property exemptions in 2012.
The company applied for a five-year renewal. But the state Board of Commerce and Industry, which approves the exemptions, denied it in October last year because no one from Folgers had shown up to the renewal hearing. The board denied the company’s appeal of that decision in February.
In theory, that meant the company owed more than $1 million in taxes dating back to the 2017 expirations. But as the newspaper reported five months after the February decision, Williams had yet to recognize those expirations and add the properties to the taxable rolls.
Councilwoman Helena Moreno sent a letter to Williams on July 1, pointing out that the two Folgers exemptions appeared to be invalid. But an Assessor’s Office employee said, in a July 23 email to Moreno’s office, that the exemptions were valid and would remain in place through 2021.
Councilwoman Helena Moreno in July 1 letter to WilliamsMonitoring that renewal date for each exemption granted in our city is essential to ensuring tax fairness for all citizens regarding the generous ITE program.
A subsequent letter to Moreno, dated the same day The Times-Picayune/New Orleans Advocate story ran, acknowledged that the properties “apparently have Industrial Tax Exemption contracts that will not be renewed for another five years.” But, he added, “We do not cancel these type exemptions until we receive a written notice of cancellation from the Louisiana Department of Economic Development,” the state department that’s responsible for business incentives like the Industrial Tax Exemption Program.
Two years after the exemptions expired, those notices had apparently not arrived. According to Department of Economic Development spokesperson Gary Perilloux, the state does not send notifications when exemptions expire, only when they are cancelled or to announce the result of a renewal application.
Williams said his office never received notification that the renewals were denied. Perilloux declined to comment on Williams’ claim.
“LED provides assessors with copies of fully executed ITEP contracts, which identify the term of each exemption, once exemptions are approved in accordance with the ITEP rules,” he wrote in an emailed statement. “LED also maintains a web portal, FastLane … that provides a means of checking the project status and other information for ITEP.”
Moreno said that from what she’s been told, assessors should be more proactive about checking exemption status, rather than simply relying on the notifications.
“From my conversations with [the Department of Economic Development], assessors from across the state monitor FastLane … to check the status of contracts,” Moreno said. “When assessors have questions about what they see on FastLane then they call or email” the department.
On Aug. 12, Williams reached out to the Department of Economic Development to check on the status of the two exemptions. The department responded to Williams on August 30, according to Williams’ spokesman Devin Johnson, informing him that the two exemptions had indeed expired.
“The exemption was terminated retroactively as of 7/31/17, but this didn’t take place until February 2019,” Williams told The Lens in an emailed statement.
Folgers parent company, The J.M. Smucker Company, did not respond to a request for comment.
Five-year contracts
The problem that led to the Folgers properties goes back to Williams’ policy of assuming that all industrial tax exemptions are renewed after their first term.
“Your letter suggests that the exemptions are granted initially for a 10-year period, but that is incorrect,” Moreno wrote to Williams in July, pointing out that the state constitution allows for one five-year term that “may be renewed for an additional five years.”
Former Jefferson Parish Assessor Lawrence Chehardy chairs the Louisiana Tax Commission, the oversight body for property assessors across the state. In an interview, he said while he wouldn’t comment specifically about Williams’ policies, he did believe that assessors should default to removing the exemption, and that they should actively check on contracts’ statuses.
“From a technical standpoint, after five years, if you haven’t got notice of a renewal, either put it on the tax roll until you get a notice or call [the Department of Economic Development] and find out whether or not it’s been renewed,” he said.
Tax Commission rules on ITEP appear to require that kind of active monitoring by assessors.
Lawrence Chehardy, Louisiana Tax CommissionFrom a technical standpoint, after five years, if you haven’t got notice of a renewal, either put it on the tax roll until you get a notice or call [the Department of Economic Development] and find out whether or not it’s been renewed.
But Chehardy added that Williams’ system makes some practical sense, given how routine approvals have been in the past.
“Technically the contract expires after five years unless the contract is renewed,” he said. “On the practical side, it’s almost perfunctory that the contracts are always extended for another five years. So if an assessor were to carry the exemption forward for 10 years without looking back, he’s probably got something barely short of 100 percent chance it’s going to be accurate.”
According to a December presentation from Together Louisiana, a statewide affiliate of Together New Orleans, 99.95 percent of applications for the program were approved between 1998 and 2016.
While it may have made more sense in the past to assume that all renewal applications would be approved, the process has changed.
The Industrial Tax Exemption Program has come under criticism over the past few years. In 2017, The Advocate reported that it was the state’s most generous tax break, costing local governments $13.7 billion between 2006 and 2016. The report found that Orleans Parish lost out on about $112 million in revenue because of the program.
One of the top complaints from critics was that although the exemptions affected parish and city coffers, the power to grant them was firmly in the hands of the state government.
Between 2016 and 2018, Governor John Bel Edwards’ administration changed the rules on ITEP approvals, giving local governments, which are directly impacted by the lost more control over the process. The rules also changed the exemption from 100 percent of the property value to 80 percent. And renewal applications are subject to additional scrutiny.
New Orleans has now established its own rules for what qualifies a business for the exemption. The criteria include creating new jobs that pay at least $18 an hour and a good faith effort to hire construction crews within Orleans Parish.
Williams told The Lens that with the new rules, his office will no longer assume the exemptions are approved for 10 years, although he did not fully explain what the new system for tracking exemption statuses would be.
Public information incomplete, unclear
It’s difficult to confirm whether any particular exemption is valid — and whether ITEP problems in New Orleans go beyond the two Folgers properties — using publicly available records from the Assessor’s Office and the Department of Economic Development.
Both Williams and the Louisiana Department of Economic Development declined to provide copies of ITE contracts to The Lens, saying they are exempt from disclosure under the state Public Records Act because they contain pages of proprietary information about the businesses’ assets.
The Assessor’s Office and the Department of Economic Development maintain online databases, but the information on them is often incomplete. The state database includes data on ITEP approvals, including ITEP contract numbers and associated street addresses. Many business addresses have multiple exemptions, representing multiple construction projects or major equipment purchases.
But it does not show tax bill numbers associated with those exemptions. The Assessor’s Office creates a unique tax bill number for every granted exemption, meaning a single address can have several tax bill numbers.
The Assessor’s Office’s database, meanwhile, will show that an individual tax bill number is or has been subject to an exemption, but it only occasionally shows ITEP contract numbers. Tax rolls available through the Louisiana Tax Commission’s online database likewise do not include those contract numbers.
To add to the confusion, Williams’ public property tax database contains a number of property parcel entries for expired exemptions.
Together New Orleans pointed to this as proof that the assessor never ended those exemptions. But Williams said that’s just a matter of housekeeping — his office hasn’t gotten around to deleting them yet. (Several that appeared in the group’s presentation have since been removed from the database.)
He said that doesn’t mean the values of those properties weren’t added to separate, taxable parcel entries after the exemptions expired.
“We put the data out there, but then everyone’s reading it and sometimes they don’t understand the mechanics,” Williams told The Lens.
In addition, verifying whether the assessor starts properly taxing ITEP property once the exemption expires is also difficult based on public data.
The new value added to a taxable parcel won’t necessarily match the stated value of the exemption because the formerly exempt property — including equipment — will have depreciated, or even become obsolete, over time. Those details are listed in tax forms that companies provide to the Assessor’s Office, but the forms are confidential.
Roll forward
This summer, the assessor raised the value of 69,000 properties, mostly homes, likely triggering higher property taxes. And for some, the increase was dramatic. According to The Times-Picayune/New Orleans Advocate, 24,000 properties had their assessed values jump more than 50 percent, with thousands of homes doubling or even tripling in value.
“The Council is constantly hearing from people that their new assessments may force them out of their homes, out of their neighborhood where they’ve always lived,” Moreno said in an emailed statement. “Yet corporations with expired exemptions are still allowed to pay nothing? This makes no sense to me.”
With the higher assessments, the City Council must choose between two options — a “roll forward” or a “roll back.” If it chooses to roll forward, property tax rates will remain the same, meaning more revenue for the city and skyrocketing property taxes for some residents. Or it could “roll back” the overall property tax rate to a lower level that would keep revenues consistent with last year.
That decision also has to be made by other agencies that receive property taxes, including the Orleans Parish School Board. Additional revenue from property taxes on businesses could figure into the decision.
“With all of the talk of new revenue – and with regular New Orleanians already facing mounting financial pressure – we have to be collecting what is actually owed to us, especially if it’s tax dollars owed by major corporate entities that can certainly afford to pay their share,” Moreno said.