shell_geismar.jpeg

Provided photo of Shell plant in Geismar.

GONZALES — A nearly $104 million property tax exemption for a proposed $1.2 billion expansion of Shell Chemical's Geismar plant in Ascension Parish appears headed for approval this month.

Shell is eyeing the U.S. Gulf Coast and specifically its Geismar plant on the Mississippi River for a new monoethylene glycol unit that would produce 1.2 million tons per year, a capacity five time larger than either of the units at the complex now. The new unit would add 23 permanent jobs with a payroll of $2.3 million per year and 1,030 temporary construction jobs, Shell executives said.    

On the same night a split School Board in neighboring East Baton Rouge Parish shot down $2.9 million in school tax exemptions for ExxonMobil after an extended public debate, the Ascension Parish Council gave its enthusiastic backing to a Shell exemption that dwarfs what ExxonMobil was seeking.

"I'll put it to you like that commercial, you know: 'We know you have choice of where you want to go.' We appreciate you selecting Ascension Parish. I know we're still competing, but we're going to extend the hand of friendship and welcome," Councilman John Cagnolatti told a Shell executive Thursday in Gonzales.

The 10-year exemption for Shell received the 11-member council's recommendation with an unopposed vote, one abstention, no public comment and only plaudits from council members.

Gov. John Bel Edwards has the final say on the exemption, though it's already received backing from an important state economic panel.

Shell also hasn't made a final investment decision for the so-called MEG complex and won't until the fourth quarter of the year.

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Rhoman Hardy, the Geismar plant manager, said the local incentives are important to the company's investment decision but so did export tariffs, which Hardy believed can be managed. Monoethylene glycol is used for antifreeze but also industrial plastics. The majority of the plant's product will be bound for China. 

The Ascension Parish government's share of the Shell exemption is nearly $26 million over 10 years. Only about $2.8 million would have gone to basic parish government operations.

The rest would have gone to the Assessor's Office and a number of quasi-independent parish entities that collect property taxes, like the libraries, the Prairieville fire department and road lighting districts, assessor's estimates show.

Critics of the ExxonMobil exemptions, which were for an upgrade and expansion at its Baton Rouge plant, argued Thursday in Baton Rouge that rejecting the requests would send more money to parish schools from projects that were already finished at the more-than-century-old Baton Rouge refinery and chemical complex.

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A far larger chunk of future tax revenue is on the line for the Ascension Parish School Board with the Shell exemption. Board would give up as much as $62.6 million over the next decade for a complex that has been in Geismar for more than 40 years and is the parish's No. 1 taxpayer and No. 4 employer. 

One school board member — among several who were at the council meeting Thursday night — said that, with three new members taking office this year, it was somewhat uncertain how the board might vote later this month. Some people in the community are arguing the board should tax the plants fully, School Board president Taft Kleinpeter said. But he added that the board will see revenue in the first year even with the exemption.

"I think the majority of the board is going to stick to what we did last year" in supporting incentives, Kleinpeter said.

Sheriff Bobby Webre said in an interview Thursday that he also plans to back the full 10-year exemption for Shell, which would mean giving up about $14.7 million for his office. 

Despite some early public opposition to incentives, Ascension local governments haven't seen much outcry over incentives since Gov. John Bel Edward gave locals a say a few years ago.

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The chemical and refining industries play an outsize role in Ascension, where all top 10 property taxpayers and five of the top 10 employers were in that sector in 2017. Sales tax collections from industry also constitute annually more than half of all collections in the parish. Many of the parish's elected officials also hail from careers in the industry. 

In the lead up to the votes on Shell's exemption, Ascension Parish officials and their economic developers have argued that, even with the large exemption, the return on investment for the governments is still positive, a $1.48 to $1.60 for every dollar in incentives over the next 30 years.

Under new state rules, local governments receive a 20 percent share of the new property tax collections in Year One, unlike in the past. Other benefits, such as sales tax collections on construction, will also accrue to the parish.

With an 80 percent property tax exemption on the Shell expansion, the value of the 10-year tax break has been estimated by the parish Assessor's Office at $103.8 million. Still, with the remaining 20 percent share, the local governments will still receive nearly $26 million in new property tax revenue, assessor's estimates say.

Follow David J. Mitchell on Twitter, @NewsieDave.