Unable to determine whether Genesis Energy is indeed a manufacturer, the Louisiana Board of Commerce and Industry has unanimously agreed to defer the 49 controversial property tax abatement requests from two local subsidiaries of the Houston-based company, which would amount to a $13 million exemption over five years.
BC&I members Kenny Havard and Jan Moller each raised questions about how Louisiana Economic Development verifies whether a company qualifies as a manufacturer. They also asked for the date of the last time LED checked the validity of Genesis’ claim, given that the company’s initial ITEP request was granted five years ago.
“Has anyone from LED gone out to inspect Genesis and verify their claims?” Moller said. “Is a paper record created when a site inspection takes place?”
Some board members explained that an LED official would’ve inspected the site in 2015, when Genesis was initially being considered for the tax break and its manufacturing status was uncertain, but were unable to confirm the existence of a paper trail establishing that such an inspection took place.
However, now that the company is seeking a renewal of its ITEP contract, Moller, Havard and members of Together Louisiana and Together Baton Rouge said the site should be revisited, with a thorough analysis conducted before the board’s next meeting.
Genesis has said that, among other services, it blends petroleum products like crude oil in East Baton Rouge, which the company equates to manufacturing a product.
“We feel that the definition of their activities does count as manufacturing,” said LED Secretary Don Pierson, noting the company employs approximately 375 workers in Louisiana. “The legal definition was met, and that’s how the initial contract was approved. Yes, they’re a transportation company, but they’re only seeking exemption on those assets that are part of their manufacturing processes.”
Still, it’s a critical distinction, since the state constitution prohibits granting industrial tax exemptions to any company that is not a manufacturer. And in his 2016 executive order overhauling ITEP, Gov. John Bel Edwards reiterated the importance of the provision, stating he would not approve contracts “unless [BC&I] has specifically determined that the establishment meets the constitutional definition of manufacturing.”
That means the board has the obligation to “specifically determine” whether any manufacturing activity is going on at the Genesis facilities, members of Together Louisiana said, arguing that the board was relying on the presumption that an analysis was conducted five years ago, despite there being no record of that inspection or its findings.
“It’s the obligation of this board to at least defer the matter, or reject these requests outright since an analysis has not been conducted,” said Broderick Bagert of Together Louisiana.
Ultimately, board members agreed. The company’s ITEP renewal will be reexamined at the board’s next meeting on Aug. 26.