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Louisiana gas terminal wins controversial $1B-plus tax break

December 14, 2018

BATON ROUGE, La. (AP) — A company planning a $15.9 billion liquefied natural gas export terminal in southwest Louisiana won approval Friday for a five-year property tax break expected to be worth up to $1.4 billion, and that could grow even larger.

Eventually, the tax break for the manufacturing facility through the state’s Industrial Tax Exemption Program could balloon to more than $2 billion, when the impacts of a potential five-year renewal are included. That could make it the most expensive tax break ever awarded in the state, according to Together Louisiana, an organization seeking more scrutiny of the exemptions.

Louisiana’s Board of Commerce and Industry overwhelmingly backed the property tax break for the Driftwood LNG project in Calcasieu Parish, after efforts to delay a decision failed in a 17-2 vote against postponement.

Gov. John Bel Edwards supports the project and will sign off on the exemption, his spokesman Richard Carbo said after the vote.

The production and export terminal by Driftwood, a subsidiary of Tellurian Inc., is expected to create 350 permanent jobs with salaries averaging more than $90,000 when it is up and running on the west bank of Calcasieu River in 2023, according to economic development data. Houston-based Tellurian said it will make a final investment decision early next year.

Documents provided to the board estimate the first year of the tax break would cost local government nearly $284 million in lost property tax revenue, dollars that otherwise would go to schools, public safety programs and other parish operations.

Over five years, that tax break could reach as much as $1.4 billion — the equivalent of $4 million for each job created. If a second five-year renewal is eventually granted, the exemption could top $2 billion, costing millions more per job, according to estimates.

Supporters say the project also will create 6,400 construction jobs and have a wide-ranging spill-out effect across the region, creating many more indirect jobs.

Sen. Norby Chabert, a Republican from Houma, called the project “a heck of a deal.”

Tellurian spokeswoman Joi Lecznar said the tax break “is crucial” to the Driftwood project.

“LNG is rapidly becoming a global commodity and to be competitive in commodities, businesses must be low cost,” she said in a statement. “We encounter fierce competition from around the world.”

Board approval Friday came despite accusations that local officials violated public meeting laws in backing the exemption. Questions were raised about the closed-door meeting used to recommend support of the tax break, and local media reported that agendas for public local meetings about the exemption lacked information about the total price tag of the tax break.

“Citizens ought to have access to the information that’s relevant,” said Broderick Bagert, with Together Louisiana, which asked the board to delay a decision until February.

Bagert said more than 1,000 parish residents signed a petition seeking the delay until additional local public meetings could be held. He said his organization didn’t oppose the project, but wanted to ensure a transparent process.

“Nobody is against it. What we are against is the exclusion of the public word,” said Georgina Graves, a Sulphur resident who supported postponement.

Board member Sen. Francis Thompson, a Delhi Democrat, said without the exemption, the Driftwood project wouldn’t be built. He said if something “out of line” occurred, a lawsuit would be filed. Shawn Wilson, the governor’s transportation secretary who sits on the board, said he didn’t “see the value in the delay.”

“I think those delays can be very complicated and very impactful, specifically when you’re talking about $15 billion in investment,” Wilson said.

Tellurian representative Jason French said any delay to the tax break approval “would send a message of uncertainty to us.” He noted the local police jury, school board and sheriff — whose agencies won’t collect the property tax revenue — supported the exemption.


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