SORRENTO — New and expanding businesses in Ascension Parish could get a break on part of their local tax bill under a plan proposed by the Ascension Economic Development Corp.
AEDC plans to take a proposal to Ascension’s municipalities to ask for a resolution allowing AEDC to offer the possibility of a local sales tax rebate as well as a property tax abatement to companies wanting to locate or expand in the parish.
“It simply gives us a tool in the tool chest,” Deanna Lafont, AEDC’s director of business development, told the AEDC board of directors on Thursday. “Because, right now, when they (business interests) call and ask if Ascension offers incentives, we have to say no.”
The proposal being considered is a local sales and use tax rebate for purchases related to the initial construction and equipping of qualifying non-manufacturing projects. Another proposal is a non-school-related property tax abatement levied against new machinery equipment and permanent fixtures for a negotiated period of time.
The respective municipality would have complete authority in approving the deal and working out its details, said Mike Eades, president and CEO of AEDC, an economic development body working on behalf of Ascension Parish.
For example, Gonzales collects an 8.5 percent sales tax. Nearly half of that amount is state sales tax, while 4.5 percent goes to local needs like the library or the city’s general fund. The Gonzales City Council would make the decision regarding how much of the local taxes the city wants to return to the new business, Eades explained.
“Or, they could even just put a dollar amount on it, where they say, ‘We’ll rebate up to this amount,’” he added.
It’s also conceivable, Eades admitted, that the project may want to use both the sales and use tax rebate and the property tax abatement if it’s able to qualify for both.
In addition to outlining how much of a tax rebate to offer a business, the city governments would also be left with defining the construction time frame since the tax rebate would be related to costs associated with “initial construction,” according to the proposal reviewed by the AEDC board.
“Normally, it’s like 18 months, but that’s also a negotiated detail,” Eades said.
And in order for a project to qualify for the program, it would have to create or retain at least 20 jobs. The project would also have to participate in a Louisiana Department of Economic Development state incentive program, namely, either the Quality Jobs program or the Enterprise Zone program. Both of these stipulate certain job creation requirements. Also part of the process is an analysis for economic return to the local municipality.
Local incentives are not out of the ordinary, said Edie Michel, director of regional development at the Baton Rouge Area Chamber.
“The work you’re doing now to set this foundation is so much better than having a project and then having to scramble to get an incentive proposal,” she told the AEDC board.
Wilson Longanecker Jr., the new mayor in Sorrento, is also supportive of local governments having something to offer a new business other than only state incentives.
“This has been done by different cities, counties, parishes across the United States,” Longanecker said Friday. “And what your ultimate goal is, to entice these businesses to come in, and give them an incentive to come in. But in the long run, the municipality comes out ahead.”
“It’s just basic common sense there,” he added.
Gonzales Mayor Barney Arceneaux and Donaldsonville Mayor Leroy Sullivan could not be reached for comment Friday.
As many communities struggle with tight budgets, the prospect of returning tax money after its been collected is not always welcome, say local leaders and economic development officials. That’s why it should only be considered for projects that will be good for the area’s economy, they added.
“Everyone wants to say, ‘Show me how this is going to be good for our economy,’” Eades said.
Longanecker said he’s willing to forgo some tax money if it means widening Sorrento’s economy.
“If we have to return some sales tax only for the business that came in, as an incentive, I don’t have a problem with that,” Longanecker said. “It’s just that in the long run we need to make sure that we’re coming out ahead and that it’s worth the investment.”
Longanecker also stressed that there needs to be a time limit set on how long the rebates can be offered, but suggested “two to three years” would be reasonable. “You certainly don’t want to put yourself in a situation where you’re waiting 10 years to come out ahead.”