LUTCHER — The St. James Parish School Board on Tuesday refused to grant a 10-year, $24 million property tax exemption for the Linde hydrogen plant under construction in the parish.
It's the first time the seven-member board has failed to support an exemption for new industrial startups or major industrial refurbishments in St. James since 2016, when Gov. John Bel Edwards gave local taxing authorities a say on the decades-old state tax exemption program.
The School Board decision came months after state officials told the board and other St. James jurisdictions they couldn't deviate from the state program's standard 80/20 exemption deal with a compromise that would have given Linde $21 million in tax exemptions over 10 years.
Under the 80/20 standard, parish taxing jurisdictions give up 80% of the property tax revenue but get 20% in revenues each year over the 10-year life of the exemption.
The School Board was told it could only vote up or down on the standard exemption already approved by the state Board of Commerce and Industry.
In response, the School Board chose "no," unanimously.
CONVENT — St. James Parish government attempted to reach a negotiated agreement on future property tax exemptions for a $228 million hydrogen …
The decision means Linde, the result of a merger between Linde AG and Praxair, won't benefit from exemptions on various school property taxes for buildings, salaries and other needs unless the company appeals to the Board of Commerce and Industry and succeeds, state economic development officials said.
The school system is expected to collect roughly $10.2 million over 10 years from the project.
Steve Nosacka, the parish economic consultant, told the School Board a stakeholders group of local officials who review exemption requests recognized Linde's project offered more benefits than its 15 permanent jobs but also heard the concerns of residents that the local officials not be a "rubber stamp" for new exemptions when the parish had many needs.
The Parish Council is expected to weigh in Wednesday night. Sheriff Willy Martin has yet to decide but was present for the vote Tuesday afternoon at the School Board office in Lutcher.
St. James Parish has traditionally had a close relationship with industries but has also seen opposition to new expansions in recent years from some residents and outside groups.
Nearly a third of workers in St. James are employed by industrial manufacturers, state labor data show, and the small public school system places a strong emphasis on trade skills.
On Tuesday, School Board members were quick to explain they weren't anti-industry but had to look out for the students they are charged with educating and whom, they argued, were underfunded through the state's school revenue formula.
"When I was elected to this, my passion is our students … children. That's my priority. I'm not against industry, but we need survive. We need to survive with taxes," said Diana "Granny" Cantillo, a four-term member from Gramercy.
Others pointed out that their constituents have regularly aired concerns about the growing impact of the state exemption program, which for years had granted lucrative 10-year tax exemptions for major industrial facilities before locals had a say.
School Board member Sue Beier added residents are also opposing new industrial complexes when they come before the Planning Commission, to which she is a school system adviser.
"When you look at the amount of money we're leaving behind, it's not fair," Beier said.
A state board gave final approval Wednesday to changes in the handling of a controversial 80-year-old tax break for manufacturers.
For 2020, even without Linde's exemptions, St. James will have $2.57 billion in industrial tax exemptions, more than three-quarters of the total assessed value of all land, property and equipment in the Mississippi River parish of 21,000 people.
The taxable assessed value in 2020, the base from which all property taxes are calculated, totals $675.3 million, or about a quarter of the industrial exemptions, according to assessor's office figures. Homestead exemptions hit $42.2 million in 2020.
In an email before the board vote, Mitch Rabalais, spokesman for the Louisiana Association of Business and Industry, defended the Industrial Tax Exemption Program. He pointed to a trade group analysis showing that, even with exemptions, St. James benefits greatly from the spillover impact from industrial operations.
St. James ranks in the top 10 in per capita sales and property tax collections and has among the state's highest paid teachers and weekly wages overall.
"The ITEP program doesn’t just bring industry to a parish, it also brings an incredible amount of jobs and investment as well," Rabalais said.
The $247 million Linde steam methane reformer is being built at the Shell Convent oil refinery and is designed to take advantage of a pipeline network Linde has between New Orleans and Baton Rouge to sell its products to customers in the region.
Construction of the Linde complex is expected bring around $2.5 million in sales taxes to the School Board and another $1 million to parish government, Nosacka said.
In addition to 15 permanent jobs, the Linde complex is projected to generate 62 indirect jobs but with no guarantees that hires would be local, Nosacka said. That works out to $1.6 million in tax exemptions from all jurisdictions for each permanent, direct job, Nosacka said.
According to Nosacka's analysis, Linde's per-job cost in exemptions is 1.7 to 3 times more than what the much larger YCI Methanol or FG LA plastics complexes being built or planned in the parish require.
Before the vote, John Fogarty, commercial director for Praxair, made a pitch for the exemption and emphasized his company's work with the local officials on the tax exemption since early 2019 and in trying to train workers, saying the company wanted help in the future.
"Really, we'd like to say, 'We want you to lead us where you need us in terms of what you need in here,'" he said.