Multiple questions are being raised over what appear to be controversial property tax abatement renewal requests from two local subsidiaries of Houston-based Genesis Energy, which want a $13 million industrial tax exemption on their East Baton Rouge Parish facilities over a five-year period.
The Louisiana Board of Commerce and Industry is considering the request today, at its first in-person meeting since the state’s economy reopened. Perhaps not surprisingly, Genesis’ requested abatement—which equates to $2.6 million a year on some $143 million worth of local property—has garnered some criticism, most notably from advocacy group Together Baton Rouge but also from new BC&I member Kenny Havard.
Their primary argument: Is Genesis even a manufacturer?
Back in 1989, the courts ruled that in order to qualify for ITEP, a company had to be an actual manufacturer. At the time, a waste incineration company requesting ITEP tried to argue it manufactured ash, but the courts ruled against the company, establishing precedent.
So when Genesis’ ITEP request first appeared on the board’s agenda in February, Havard deferred it over uncertainty as to whether the “miscellaneous capital additions” the company was seeking counted as manufacturing.
“I saw that Genesis had a page-and-a-half of ITEP requests, so I just asked a question: What do you manufacture?” recalls Havard, who’s familiar with Genesis from his days in the oil and gas industry. “No one moved, no one was even there to represent them, and here we were, about to give them millions in tax exemptions.”
Genesis did not respond to multiple requests for comment before this morning’s deadline.
Generally, however, Havard says pipeline companies—which are regulated by DOTD—are not manufacturers. He also points to how, even on its website, Genesis describes itself as a logistics company and makes no mention of manufacturing.
Furthermore, TBR takes issue with the way Genesis—which has already removed $136 million from its property tax rolls—appears to have filed its ITEP requests, by breaking them up into 49 different renewal requests, each valued at or under $5 million.
“This allows them not to have to file advance notice, so they can just bring up their request in the meeting and it can fly under the radar,” says Rick Moreland of TBR. “We’re not saying it’s an ethical violation—they’ve done what apparently lots of other companies have been doing, but it’s not the way a business would work.”
The complicated structuring of the ITEP applications also raises another question: Because no detailed cost-benefit analysis is provided and with what Moreland argues is little oversight, how can the board ensure these renewals are indeed “capital additions” rather than routine maintenance updates?
Overall, Genesis’ request exemplifies the kinds of issues the board will be dealing with at a time when state and local budgets are getting hammered, but much of the tax-related legislation being pushed by business and industry advocates is getting passed. And it’s not the only ITEP request Havard has seen so far this year that’s made him raise an eyebrow.
“We need to slow down and look at these things and make sure we’re giving them to companies that deserve them,” Havard says. “The decisions we make affect local governments and school systems for 10 years, so it’s important we do our job correctly.”
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