DONALDSONVILLE — Shell Chemical officials are trying to make the case this month to Ascension Parish school and government officials to sign off on more than $100 million in property tax exemptions over the next 10 years on a $1.2 billion expansion in Geismar.
Shell Chemical LP has started production on the fourth alpha olefins unit at its Geismar manufacturing plant, the company said Monday.
Under the state's new rules for industrial tax exemptions, though, the global oil and chemical giant would still pay nearly $26 million in new property taxes over the same time period if the expansion goes forward in Ascension Parish.
The project is also expected to bring more than 1,000 temporary construction jobs, state notifications say, with a projected $7 million to $10 million boost in sales tax collections during the construction phase.
State notifications describe the proposed expansion as a "world-scale" monoethylene glycol plant. Company officials said the proposed new unit would be five times the size of the current one at the Geismar plant, creating 23 new permanent jobs with an estimated payroll of $2.3 million per year.
Shell Chemical LP is considering a $1.2 billion expansion of its Geismar facilities, a project that would add a “world scale” mono-ethylene gl…
Rhoman Hardy, the Geismar plant manager, told the Ascension Parish School Board Tuesday night that Shell Chemical has 17 potential sites for the expansion and that tax savings have played a key role in the company's decision to choose Ascension for the expansion.
"The incentive plan was critical in coming to Louisiana," Hardy said.
Shell Chemical hopes to make its final decision on the location of the unit in the fourth quarter of this year and expects for construction, once begun, to wrap up by the end of 2023, Hardy said.
Monoethylene glycol is used to make antifreeze, plastics and for a variety of industrial uses.
Kate MacArthur, president of the Ascension Economic Development Corp., which recommended approval of the tax exemption request, has said that economic developers have worked with Shell on the project since October 2015.
The School Board meeting in Donaldsonville on Tuesday was the start of Shell Chemical officials' public pitch for the lucrative incentives. Shell officials are expected to go the Parish Council in Gonzales at 6 p.m. Thursday. They are also meeting with Sheriff Bobby Webre.
While the School Board will meet again later this month for a final vote, the Parish Council will cast a final vote Thursday. A state board has already approved the exemption, triggering Shell officials' appearance before parish officials. Gov. John Bel Edwards has the final say.
Typically the Parish Council considers industrial tax exemptions in a two-step process, bringing them first to the Finance Committee and then to the full council. However, the Shell project is being handled differently. The council's final vote on Shell will take place at the request's first appearance before the 11-member council.
Parish Council Chairwoman Teri Casso said the combination of modified holiday schedules and a new 60-day window for local governments to act prevented putting the item on the council's Finance Committee agenda before the window would have expired.
Under new state rules, local governments have 60 days to act after they are notified that an exemption has received the backing of the state Board of Commerce and Industry. She said the council was notified in early December.
If the council doesn't vote within the 60-day time frame, the exemption would pass automatically. The rules also don't allow local governments to negotiate a share of taxes as an earlier reform of the tax exemption program did, instead giving them an up-or-down vote.
Under the rules, industries get an 80 percent exemption on new machinery and equipment for 10 years. An earlier reform, which allowed the negotiation of exemptions, allowed up to 100 percent exemption for five years and allowed manufacturers to apply for up to an 80 percent exemption for an additional three years.
The new exemption breakdown lengthens the term of the tax savings but offers local governments some upfront property tax money when new facilities haven't started to be heavily depreciated under state property tax rules.
The total property exemption for Shell over the first 10 years has been estimated by the parish Assessor's Office at $103.7 million, but Shell said that even with the exemption, total property taxes paid over 20 years will be $87.5 million.
A breakdown of the incentives from the Ascension Economic Development Corp argues that when property tax exemptions and sales tax collections from construction are considered, parish government and the School Board will receive $1.44 to $1.60 for every dollar they are giving up in incentives over the next 30 years.
The calculation doesn't include the added benefits from the payroll and future multimillion dollar maintenance jobs known as "turnarounds," the AEDC noted.
The School Board, which receives the largest portion of property taxes in Ascension, will lose out on $62.5 million during the first 10 years. The Assessor's Office, parish government and its associated millage-collecting entities like the library and fire departments will give up more than $26 million over the first 10 years.
The Sheriff's Office will give up $14.7 million, assessor's estimates say.
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