Tin Roof Brewing Company is on track to become the first East Baton Rouge Parish company to earn an industrial tax exemption since Gov. John Bel Edwards began revamping the tax incentive program in 2016 to give local governments more of a say.
The parish School Board on Thursday agreed to grant the brewery’s request for a tax break of $45,474 in property taxes over a five-year period plus another $23,950 if the exemption is renewed for three more years. That follows on the Metro Council’s Nov. 8 vote to do the same. The Baton Rouge-based brewery is now seeking the approval of East Baton Rouge Parish Sheriff Sid Gautreaux.
The final step is to take these local approvals back to the Louisiana Economic Development and the state Board of Commerce and Industry for final approval.
The faith-based group Together Baton Rouge has been urging all parties to delay making a decision until they can first agree to a set of minimum criteria for every exemption. For instance, it wants any employer granted an exemption to have to maintain a minimum number of jobs created, cap the revenue-per-job lost, hire a high percentage of its new employees from within the parish boundaries, and not get exempted for property that will depreciate in 10 years or less.
“This is not about Tin Roof,” Brod Bagert, an organizer for Together Baton Rouge, told the School Board on Thursday. “It’s about the precedent we set.”
Several School Board members said they like a lot of what of Together Baton Rouge is suggesting, but that they need to decide the issue for themselves.
Board President Evelyn Ware-Jackson requested that Superintendent Warren Drake develop a draft criteria that the board can begin debating when it meets in January.
“It’s very important that we establish our own set of criteria,” said Ware-Jackson.
The School Board required more information from Tin Roof than the Metro Council did. For instance, it requested documentation of the improvements the company makes as well as an annual review of its employment and payroll records. If Tin Roof produces 10 percent fewer jobs than promised, the Metro Council said a “reconsideration of the terms of the exemption” is possible.
The School Board used stronger language, saying falling short of job creating promises could mean reducing or canceling the exemption entirely and denying any renewal.
Board member Donna Collins asked Tin Roof’s tax credit consultant Jason Ambeau whether the company could wait any longer. Ambeau said Tin Roof is trying to settle this issue by the end of December, in time to lower its 2017 property tax bill. He said his client has waited long enough.
“I was told by everybody, hold on for a few more weeks, and that’s been a long time,” Ambeau said, adding that he’s been told that more than 40 other exemption applicants are in a similar limbo.
Tin Roof submitted its application in September 2016 to Louisiana Economic Development. Ambeau said the brewery was under the assumption that the exemption would be approved quickly as was customary in the past.
The exemption springs from a $577,281 expansion of the brewery’s facility, at 1624 Wyoming St. That expansion began in summer 2016 after a license agreement with LSU for Bayou Bengal Lager.
Ambeau said the brewery will have no trouble showing the exemption will generate at least five new jobs — he said it will likely be a few more jobs — and will produce an economic benefit for the parish.
The school system hired LSU economics professor Jim Richardson to analyze the Tin Roof application. Richardson produced three different scenarios as to how the district would recoup the taxes it's giving up. In all three, the school system does not recoup the loss after eight years from growth and other taxes, but does after 20 years. Tin Roof says in its proposal that at face value, the net 20-year tax benefit for the parish is $87,766. That 20-year benefit, though, drops to just $23,969 under Richardson’s most pessimistic scenario.
The economist suggested the board should be asking another important question.
“The question in almost the first test of any incentive program is, If we don’t give this to you are you still going to do the project?” Richardson said.
Richardson said that the answer is inherently subjective and invites disagreement. In his analysis, Richardson suggests that there are reasons to doubt that Tin Roof would cancel its expansion without the exemption. In general, though, he said when this question comes up, “I could argue both ways.”
Ambeau said Tin Roof is rooted in Baton Rouge, but incentive programs help keep them here.
“I would tell you for Tin Roof, they didn’t have to plant their feet in Baton Rouge and they certainly don’t have to stay there,” he said.