Bollinger Shipyards, a large Louisiana-based marine services company, is attempting to move an $8 million property tax exemption from St. Mary Parish to one of its subsidiaries in New Orleans — Bollinger Algiers.
The exemption was originally granted under the state’s controversial Industrial Tax Exemption Program in 2017 for a number of capital additions, including a dry dock, according to a state database. If the transfer is approved by the Louisiana Board of Commerce and Industry, the company won’t have to gain approval from local government bodies like the New Orleans City Council and the Orleans Parish School Board, as it would if it had originally applied for the exemption in Orleans Parish.
Bollinger applied for the exemption in March 2017. Less than two months later, in May, the company moved the dry dock from St. Mary, where it was built by Bollinger Marine Fabricators, to New Orleans, where it was put into service by Bollinger Algiers, according to media reports. The company uses the dry dock for boat repairs.
But the company didn’t apply for a transfer until July 31 of this year. And according to Devin Johnson, a spokesperson for Orleans Parish Assessor Erroll Williams, Bollinger Algiers didn’t report the dry dock on its tax forms until this year, meaning it didn’t pay taxes on the property in Orleans Parish in 2018 or 2019. Johnson said the property was added to the tax rolls for 2020, and that the office is prepared to collect back taxes if the transfer request is denied.
Although the transfer request was recently submitted, it would be retroactively effective from May 2017, when the dry dock was moved to New Orleans. According to ITEP rules, transfer requests for ITEs must be submitted within three months of the transfer. Failure to do so “shall constitute a violation of the contract.” But the board is still allowed to vote to approve it.
According to a state database, the exemption let Bollinger off the hook for $115,000 in taxes in the first year of the exemption alone. The property tax rate in St. Mary Parish listed in state records available online is roughly two thirds the size of New Orleans’, meaning it will realize a larger benefit in New Orleans. According to a notice sent out by the Orleans Parish Assessor, Bollinger Aligers could owe $163,000 more in personal property taxes in 2020 than it did this year.
ITEs are granted by the state’s Board of Commerce and Industry. But starting in 2016, local tax collecting bodies such as city governments, parish school boards and sheriffs have been able to veto applications. The Lens previously reported that Bollinger was the first company to have an ITE application rejected by the Orleans Parish School Board in 2018.
Local bodies will not, however, have the opportunity to reject the Bollinger transfer, according to Gary Perilloux, communications director for the Louisiana Department of Economic Development. That’s because the original exemption was granted under the old rules, which didn’t grant local veto power.
According to the ITEP rules, companies can operate under the old rules if they submitted an advanced notice to the state that they were planning on applying for an exemption prior to June 24, 2016, when Governor Edwards signed an executive order amending the program. Bollinger submitted its advanced notice for the $8 million exemption in 2015.
‘It just didn’t look right’
Bollinger’s request to transfer all but $2,252 of the $8 million exemption from St. Mary Parish to Orleans was discussed at a board of industry meeting last month. The board voted to defer the transfer request until the board’s next meeting on Dec. 13.
“It just didn’t look right to me,” Jerald Jones, the chairman of the board, told The Lens. “So I wanted to defer so we could get that straightened out before we try to act on it.”
It’s unclear why Bollinger originally applied for an exemption in St. Mary, since the dry dock was moved to Orleans Parish only two months after it submitted its ITE application. The company did not respond to requests for comment.
“I can see in certain circumstances where it could be considered and I wouldn’t have a problem with it,” Jones said. “I don’t think there’s an ironclad answer that we could apply to every situation. I think it’s got to be real fact specific.”
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.
Chief among criticisms of the program was that while it affected parish and city coffers, the power to grant them was firmly in the hands of the state government.
In 2016, Governor John Bel Edwards’ administration changed the rules on ITEP approvals, giving local governments more control over the process. In 2018, the rules were updated again to change the exemption from 100 percent of the property value to 80 percent.
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.
This year, Orleans Assessor Erroll Williams has come under fire from the City Council and the advocacy group Together New Orleans for failing to properly keep track of expiring exemptions. The controversy centered around two Folgers exemptions on property worth a combined $40 million, which was still untaxed in 2019 even though the exemptions expired in 2017. After months of questions from the Council, the media and advocates, Williams announced he would tax the property in 2020 and collect back taxes from the past two years.
The council, however, appears to believe there could be more money the city is missing due to invalid ITEs. In September, the council passed a resolution calling for a sweeping review of current ITEs in Orleans Parish, although it remains unclear if Assessor Williams will comply.