As part of ExxonMobil’s property tax exemption request for a potential expansion project worth up to $1 billion—which the school board will vote on tonight—the company is also submitting a proposal to create a small business resource center in north Baton Rouge.
The center—touted as a community initiative designed to support diverse businesses in the area—is being developed, according to Exxon, in partnership with the mayor, local economic development agencies, LSU and Southern as well as financial institutions.
The initiative, however, is tied to Baton Rouge securing the Exxon expansion project, which may hinge on whether local entities approve the ITEP request.
“The potential project will partially fund the small business resource center,” says Exxon spokeswoman Megan R. Manchester. “This resource center is one example of innovative community outreach associated with the potential project.”
But East Baton Rouge School Board President David Tatman says the small business center proposal will be considered a separate matter from the board’s vote on Exxon’s request for property tax breaks on the expansion project.
“Clearly Exxon is interested in helping with economic development in north Baton Rouge, which is great. But, for this board member at least, it has no impact on the ITEP request,” Tatman says. “Each application has to be judged on its own merits.”
Exxon won approval of its ITEP request from the state Board of Commerce and Industry on Aug. 29. The request then moved on to local governing bodies—the school board, Metro Council and sheriff—which have a 60-day approval period: 30 days to place the item on a public meeting agenda, and another 30 days to vote on the ITEP application. If no action is taken within 60 days, the application is automatically approved.
Exxon’s potential polypropylene expansion at the Baton Rouge polyolefins plant would be part of the oil giant’s 10-year, $20 billion “Growing the Gulf” initiative. The project is expected to create 45 direct jobs, 20 contractors jobs and up to 600 temporary construction jobs.
Exxon will make a decision on the project location by the fourth quarter.
Under the new ITEP rules, property tax breaks are capped at 80% for 10 years, enabling local governments to collect some property tax revenue during that window.
The school board had LSU economist Jim Richardson evaluate the ITEP proposal and, according to his report, Exxon’s potential tax abatement on the expansion project, if approved, would total nearly $32 million over 20 years. Potential property taxes collected over that time would total $23 million, in addition to $32 million in sales taxes.
All in, that’s $55 million in total local taxes collected on the expansion project over 20 years, according to the report.
“… the benefit-cost ratios suggest that the proposed tax abatement as developed by LED is a good investment for local governments in East Baton Rouge,” Richardson concludes in the analysis.
Together Baton Rouge, which has been critical of ITEP, has urged the school board and council to establish standards for approving ITEP requests. While the Exxon expansion project will likely meet those standards, TBR says, other pending Exxon ITEP requests that will soon come before the board are more problematic.
“The more challenging decisions will come with next set of ITEP applications,” Tatman says “We’re on the cutting edge of this. We want to make sure we’re doing what’s best for our students and community.”