DALLAS - Major petrochemical complexes in East Baton Rouge Parish, La., believe they may be exempt from proposed increases in sales and property taxes that would support $887.5 million of capital improvement bonds.
Dan Borné, president of the Louisiana Chemical Association, said a 2008 Louisiana state law exempts industrial areas from taxes levied by new special service districts unless the extra revenue is needed to maintain existing services.
He outlined that position Monday to the Press Club of Baton Rouge. The industrial trade group is not opposed to the bond package, Borné said, but would like to have the tax issue resolved.
Borné said the association backed Act 644 of the 2008 regular session to avoid taxation by local government districts that do not actually provide needed services to industrial areas.
The parish's tax base includes several large petrochemical complexes along the Mississippi River. ExxonMobil is the parish's largest employer and the largest property taxpayer. It has about 1,000 employees and its facilities account for 7.1% of the total assessed tax base in the parish.
East Baton Rouge Parish Capital Improvement District No. 1 was created last week to finance a capital improvement program proposed by Parish Mayor-President Melvin "Kip" Holden that includes economic development, drainage, and public safety projects.
Attorney Richard Leibowitz of Breazeale, Sachse & Wilson LLP, the parish's bond counsel, provided an opinion to the combined city-parish government stating that the 2008 law does not cover the current situation.
"We did not create a special services district," Leibowitz said. "We created a capital improvements district, and there is a legal distinction between the two."
Leibowitz said his firm is comfortable with the opinion that the law does not exclude the industrial areas from the new district, as are parish officials. There are no plans at this point to seek an opinion from the state attorney general, he added.
He said the 2008 law is an effort to prohibit the formation of service districts, such as fire protection, that draw their boundaries specifically to include industrial areas solely to boost their assessed valuations.
"We are not providing services," Leibowitz said. "We are financing capital improvement projects across the parish."
The Metropolitan Council established the improvement district on July 22. The council is scheduled to meet Aug. 12 to consider the resolution setting the bond election for Nov. 14.
The district would issue bonds, supported by an increase in the parish sales tax of 0.5%, to a total of 5%, and a property tax increase of 9.9 mills. With voter approval, both taxes would go into effect Jan. 1 for 30 years.
The taxes would be applied in Baton Rouge and unincorporated portions of the parish. The ordinance setting up the district specifically excludes the suburbs of Baker, Central, and Zachary.
The additional sales tax is expected to generate $39 million a year and the property tax hike is projected to provide another $29 million annually for debt support.
The parish's outstanding sales tax revenue bonds have underlying ratings of A2 from Moody's Investors Service and A-plus from Standard & Poor's and Fitch Ratings.
