The Orleans Parish School Board has voted to deny a local shipbuilder’s request for a tax break, the first such action from a board that was only recently given the power to review requests for industrial tax exemptions.
Six board members voted Thursday to deny Bollinger Algiers’ application for an industrial tax exemption, in line with the school district administration’s recommendation. Board member Sarah Usdin abstained.
However, the effect of the vote remains unclear as other local government bodies decide how to review such requests.
The industrial tax exemption is the state’s most expensive tax break, costing local governments $13.7 billion in lost tax revenue between 2006 and 2016, according to an analysis by The Advocate.
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Even though the exemption affects local governmental agencies by diverting local property tax revenue away from them, until 2016, industrial tax exemptions were approved by a state board, without local input.
But under two 2016 executive orders from Gov. John Bel Edwards, local agencies — such as school boards and law enforcement districts — can now vote to deny the requested exemptions and keep their portion of the taxes.
This new ability has shifted the playing field for businesses seeking tax breaks, as they must now sway many more agencies when asking for the exemptions.
Proponents say the change will hold businesses more accountable to their promises to local governments about the benefits of requested exemptions. But critics argue it could make the state less competitive in attracting new business.
It appears the first local agency to reject a tax break was the Caddo Parish Sheriff’s Office in February.
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Earlier this year, Orleans Parish School Board member Ben Kleban proposed denying all industrial tax exemption requests. But that idea didn’t pass muster with other board members and the business community.
Earlier in the week, a board committee had declined to take a position on the Bollinger application, forwarding the item to the full board.
After that meeting, Quentin L. Messer Jr., chief executive of the New Orleans Business Alliance, said in a statement that the process is working as the governor anticipated, with decisions being made at the local level.
“The challenge is to strike the balance between maintaining Orleans Parish's economic competitiveness relative to neighboring parishes and allowing OPSB, the Sheriff’s Office and the City of New Orleans to develop policies reflective of their stakeholders’ concerns and priorities,” he said.
The School Board’s vote to deny the exemption was based on a set of standards that the board approved over the summer. However, as part of that summer vote, the board also agreed to defer to standards formally adopted by all citywide taxing bodies, including the city and the Orleans Parish Sheriff’s Office. That left the result of Thursday’s vote in question.
The citywide standards have not yet been adopted. After Tuesday’s meeting, a spokesman for Mayor LaToya Cantrell told The Lens that until they are in place, the mayor believes exemption requests “should be allowed to move forward.”
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The Mayor’s Office did not respond to a request for comment after Thursday’s vote.
The request from Bollinger Algiers, a subsidiary of the shipbuilding and vessel repair firm Bollinger Shipyards, did not meet two of the district’s four newly created requirements to secure an exemption, according to the notes in a board resolution to deny the exemption.
Applicants must meet all four requirements, according to the board's policy. But the Bollinger project is not in an economically “distressed region,” as defined by the school district, and construction has already begun. The criteria say that projects cannot have started before getting approval for the tax exemption.
It’s unclear exactly what the project is.
The state's industrial tax exemption policy has allowed eligible manufacturers to forgo all property taxes related to new facility improvements for up to 10 years. That was recently capped at 80 percent of property taxes for 10 years, but because Bollinger applied for the exemption before the rules changed, it is seeking a 100 percent exemption, emails from the company show.
The Bollinger request involves a small amount of money. The tax break would cost the city about $1,300 each year for the first five years and $3,000 each year after that, said Eric Seling, school district chief operating officer. But the schools’ share represents about 30 percent of the total value of the exemption.
The district did not provide an exact figure for its share.
The City Council and the Sheriff’s Office can also consider Bollinger Algiers’ application.