Louisiana Economic Development isn’t usually in the business of providing upfront infrastructure or relocation incentives to startup business ventures such as Elio Motors. The reason, as LED Secretary Stephen Moret tells The Shreveport Times, is risk management.
“Startup companies commonly face challenges raising the funding needed to launch their projects. Accordingly, LED is careful to avoid placing state funds at risk with such firms,” Moret says, adding upfront incentives are not given to startup companies unless major national investors are behind them or a project is fully capitalized.
In the case of Elio Motors, generating enough capital for production has been a difficult process. The company intends to manufacture its highly anticipated, cost-efficient, 3-wheel vehicle. Elio Motors initially was expected to begin making the vehicles in the middle of 2014 and have 1,500 people on its payroll by the end of this year.
The promise of well-paying manufacturing jobs led Caddo Parish’s Industrial Development Board to bankroll—to the tune of $7.5 million in public dollars—the purchase of the former General Motors assembly plant, where Elio is subleasing space from Industrial Realty Group.
When Gov. Bobby Jindal and LED announced the project in January 2013, the state said it would provide Elio an incentive package that included workforce development assistance through the LED FastStart program, as well as a Competitive Projects Payroll Incentive that would provide annual, performance-based payroll rebates of 13% for each qualifying job for the first 10 years of operations. In addition, the company was expected to utilize the state’s Industrial Tax Exemption Program incentive, which provides a full abatement of local property taxes on new capital investments for up to 10 years.
It remains unclear if Elio Motors will ever take advantage of any of the performance-based incentives it has been offered by the state. Funding issues have plagued the startup. The thousands of jobs promised for Caddo and Northwest Louisiana residents have yet to come to fruition and the company needs roughly an additional $230 million to start production.
The problem raises questions about why Caddo Parish bankrolled a start-up now struggling to get off the ground while state officials opted to wait for results. LED and state officials are normally at the helm of major economic development announcements. But it’s been relatively quiet about Elio Motors since the January 2013 announcement.
There is nothing LED can do until the company has raised the capital it needs to move forward, Moret says.
“LED has no control over the GM-Shreveport facility or arrangements between the parish and [Industrial Realty Group],” Moret says.
