Between the state’s unpredictable and ever-changing tax climate, transportation infrastructure problems, troubled schools and skilled worker shortage, it’s hard enough attracting business, industry and developers to south Louisiana.
But that hasn’t stopped some elected officials in Baton Rouge from trying to make this parish an even less inviting place for commercial investment.
Consider David Weinstein’s recent experience before the Metro Council. The developer was seeking a five-year extension of the 10-year tax abatement he was granted in 2012 for renovating the historic Tessier Building downtown at 342 Lafayette St.
The incentive doesn’t exempt Weinstein from property taxes. Rather, it freezes for 10 years his tax rate at the level at which the building was assessed before he renovated it, $800,000, rather than at the $2.5 million it would be assessed at today.
The renewal was supposed to be a routine thing. The city and state had agreed to the 10-year deal in 2012, and Weinstein more than lived up to his end of the bargain, returning to commerce the city’s oldest historic building in return for a $50,000 tax break.
But at the meeting, Metro Council members Chauna Banks and LaMont Cole put Weinstein through the ringer. They grilled him on why he hadn’t done more for north Baton Rouge and questioned why he should get a tax break for yet another downtown project when there isn’t more development in their north Baton Rouge districts.
Never mind that Weinstein already had the incentive—a state incentive, by the way—and was merely seeking a renewal. Never mind that he actually has invested in north Baton Rouge, near the airport, and is also involved in the redevelopment of the former Entergy site at 1509 Government St. in blighted “Downtown East.”
None of that factored into the irrational debate, and for a while it looked as though the renewal might not have the votes to pass. In the end, though, after Weinstein agreed to accompany Cole on a driving tour of north Baton Rouge neighborhoods, it did pass, having turned out to be an exercise in bad political theater by a couple of actors who clearly don’t understand the fundamentals of economics or economic development.
Still, it does make you wonder why anyone would be inclined to risk millions of dollars in this market when there are other communities that would welcome the investment and make the process far less painful.
Florida developer Gary Gibbs is likely wondering the same thing, though he won’t talk about it, so gun shy is he after his experience dealing with local elected officials. Ironically, Gibbs is planning to invest in north Baton Rouge, with a 380-unit workforce housing complex of townhome-style apartments called Howell Village.
It’s the kind of project you might think would please Metro Council members representing low-income, blighted districts in north Baton Rouge. But Banks—the same Banks who wants Weinstein to develop in north Baton Rouge—and state Sen. Regina Barrow gave Gibbs a run for his money in late April, when they held a community meeting to disparage his $44 million project.
The project had already been approved twice by the Metro Council and once by the Planning Commission. It also had the support of District 10 Metro Councilwoman Tara Wicker. But Banks and Barrow threatened to derail it at the eleventh hour on the grounds that it’s too dense and doesn’t include single family houses or enough supporting infrastructure nearby.
Nevermind that those concerns had been vetted in previous public forums. Nevermind that north Baton Rouge—which lost six multifamily complexes in the August 2016 flood and currently has a 0.4% vacancy rate—has a crying need for affordable housing.
Nevermind that Howell Village represents development in the very area of the parish that advocates of north Baton Rouge complain is overlooked.
In the end, Gibbs was able to placate the lawmakers by agreeing to a number of measures, including beautification initiatives, a clubhouse for residents of the complex and an assurance that he would work with the city-parish on infrastructure projects. Howell Village is moving forward.
These are but two examples of the kind of shenanigans going on at City Hall. They’re relatively minor in the scheme of things. But they speak to a dangerous precedent. The divisiveness and dysfunction that characterize the Metro Council and, increasingly, the Legislature, are no longer confined to the political realm. They’re starting to affect the way deals are done in the private sector.
Investors and developers don’t have to put up with it. They can build their complexes, shopping centers or manufacturing facilities anywhere. ExxonMobil and its Saudi partner recently demonstrated that fact when they announced plans to build a $10 billion ethane cracking plant in south Texas instead of in south Louisiana. We’re just not that great.
That’s not to say we should roll over and give away the keys to the shop. We can limit tax incentives and giveaways to a reasonable level. But to have a business-friendly climate the rules have to be fairly and consistently applied. More important, the local governing authority has to demonstrate that it knows what the rules are and exhibit sanity and stability in applying them.