State board opts for leniency for noncompliant ITEP companies


The Louisiana Board of Commerce and Industry opted last week not to punish companies that have failed to live up to their Industrial Tax Exemption Program agreements to receive property tax breaks.

Board members indicated they would look favorably at businesses with local support that are creating jobs and payroll even if the companies are behind schedule, though members stressed they did not intend to create precedents and every case would be evaluated on its own merits.

“You’ve not seen this before,” board Chair Jerry Jones told the other members regarding the noncompliance issue. “We will likely see this going forward on our agenda.”

For decades, the board didn’t have to worry about noncompliant companies because there were no required metrics to hit. Along with requiring input from local officials before granting the local property tax break, Gov. John Bel Edwards now requires companies to commit to creating or maintaining jobs and payroll to qualify.

Local officials will have a chance to recommend to LED and to the board whether and to what extent a company should be penalized. Possible penalties include shortening the term, reducing the amount of the exemption or ending the benefit entirely. Local officials also could work out their own agreement with the noncompliant company for a default payment, in which case the company would be deemed to be back in compliance.

Four noncompliant companies were on today’s agenda, two of which had contracts for the same project. The board opted not to penalize one company, Inferno Manufacturing, for not having its paperwork in on time. They deferred action on another, A.O.U.O.P.S. Inc. of East Carroll Parish, even though the company failed to hit its jobs targets and didn’t show up to explain why.

An official with A.W. Chesterson, which was on the agenda along with its landlord, J&R Juneau, said the company had been unable to hire three new workers as planned because the COVID-19 pandemic had shaved off 30% of its revenue. The company makes parts for and repairs industrial pumps and had been unable to access plant sites for much of 2020.

But the official said the company still hung on to the workers it had despite the slowdown, has recently hired a new worker, and is preparing to hire another. The board opted not to penalize A.W. Chesterson.

Some speakers argued that if companies can’t abide by the letter of their agreements, they should have to pay their property taxes like any other business that isn’t eligible for ITEP.

“If you don’t do what you said you were going to do, you shouldn’t reap the benefit,” says Edgar Cage with Together Louisiana.

Also today, the board approved a number of new applications and renewals, including an ITEP request by CF Industries Nitrogen, which plans to spend about $121 million at its Donaldsonville facility for a hydrogen generation plant to produce ammonia. The exemption would be worth an estimated $15.76 million over 10 years, assuming renewal after five years. Five new direct jobs would be created in this phase, according to the application.