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East Baton Rouge Parish kicked in $1 million of the nearly $7 million incentive package that Louisiana Economic Development used to tempt Albemarle Corporation, a specialty chemical company, to move their headquarters to Baton Rouge. The only catch, from the local end, was the Metro Council had to approve spending the money.

Albemarle took the bait, and the council agreed to cough up the money. But what if the council hadn’t done so? Or what if Albemarle had decided they didn’t want to risk it?

“That’s the chance that we do not want to run,” the city’s Chief Administrative Officer Walter Monsour says. “We do not want to enter into laborious negotiations with a company, then have it predicated at the council level. Instead, hopefully we could have a fund that gives us permission, within the parameters the council would approve, to make those decisions on the spot.”

The state already has a deal-closing fund, officially known as the Governor’s Rapid Response Fund. First established under former Gov. Kathleen Blanco at $10 million, the fund now boasts up to $41 million. East Baton Rouge is considering starting a similar fund of its own.

Monsour says a ballpark amount hasn’t been discussed. The budget process begins in earnest in August; the administration delivers the budget by Nov. 1. In between, the amount and specifics of the fund will be worked out, and the end result will probably be set up a lot like the state fund, Monsour says.

“I think it’s certainly evidenced itself as a necessity,” Monsour says. “Now that Louisiana is in a favorable position to attract new business, it only makes sense to be able to have this as a staple of the administration, whether it’s this one or whoever should follow this particular administration.”

Adam Knapp, Baton Rouge Area Chamber CEO, says the chamber strongly supports the concept. He stresses any project should undergo an economic impact analysis to show the money spent would be worth it. The fund should have enough money for a 12-month cycle of projects; based on past experience, that might be about $3 million or so, he says.

The main issue is predictability, Knapp says. Times are good now, so East Baton Rouge has surplus dollars for incentives, but that won’t always be the case. With a permanent fund, prospects would know the money is there, regardless of who’s on the council or in the mayor’s office. At the same time, the goal would be to only spend the money if absolutely necessary.

“You would use this to leverage state funds as much as possible,” he says. “Not to be the sole source of funding, but to have some sort of contribution to show that the local community has skin in the game when trying to go to the state level.” Knapp encourages other governments in the chamber’s nine-parish region to consider starting their own funds if they can afford it.

While a local deal-closing fund would be a first for our region, it’s not a new concept. Tommy Kurtz, CEO of the Ascension Economic Development Corporation, says similar concepts have taken hold in other communities in Texas and in other southeastern states.

“It’s one of the reasons Louisiana has not been more competitive in the past, because locals have not dedicated funds in a pot to be used for matching funds, especially for infrastructure,” Kurtz says.

Kurtz says AEDC has been working on several projects that might potentially attract matching funds from the state, but local officials don’t have enough cash for the match. Discussions with former parish president Ronnie Hughes never went anywhere, but he says there have been talks with the current administration about using sales tax to carve out a local fund that could be used for infrastructure improvements.

In Ascension, setting up such a fund requires a change in mindset, as the parish has long been able to depend on chemical plant expansions for its economic development.

“I applaud East Baton Rouge for doing it, and wish all the communities in the Baton Rouge region did it, because I think it would make the Baton Rouge community competitive,” Kurtz says.

“In today’s world of economic development, most everybody is looking for incentives,” says John Ware, executive director of the Livingston Economic Development Council. And state incentives, like the Quality Jobs Program and industrial property tax exemptions, don’t always impress the consultants.

“Almost everybody you talk to is asking, ‘What do you have on the local level?’” he says.

Livingston Parish has kicked around the idea of starting its own fund with $100,000 or so. So far the money hasn’t been available, but the concept remains part of the parish’s five-year plan. A fund that size might not help with very many projects, but could help close a couple of deals, Ware says.