Louisiana: New Incentives, New Lures
31 Oct, 2012
By Sharon H. Fitzgerald
Louisiana Gov. Bobby Jindal made economic development top priority during the state Legislature’s 2012 session, and the result is four new incentives designed to increase the state’s competitiveness. Three of those incentives are available today.
Stephen Moret, secretary of Louisiana Economic Development, says the “most exciting” of the new programs is a payroll rebate of up to 15 percent for competitive projects in certain targeted sectors, particularly manufacturing and durable-goods production. The level of the rebate will be determined by the state’s return on investment, he says.
To enhance efforts to lure corporate headquarters to the state, new legislation allows for a 25 percent rebate, spread over five years, on relocation expenses for headquarters that create at least 25 high-paying jobs. “Those expenses include people, equipment, facilities and even for buying out an existing lease prematurely,” Moret explains.
The third program extends Louisiana’s corporate tax apportionment program. Previously, only manufacturers and merchandisers have qualified for single-sales factor apportionment, which bases corporate income and franchise taxes solely on sales within the state. Now the policy allows single-sales factor apportionment in other target sectors including corporate headquarters, logistics and warehousing, data centers, clean technology, destination healthcare, research and development, renewable energy, and digital media and software development.
Those same sectors will also benefit from the fourth new program, which allows Louisiana to offer a 10-year property-tax exemption for such facilities that expand or build in the state. The exemption already exists for manufacturing operations. Local governments must opt into the program, which first requires a constitutional amendment. Voters will consider the measure on the November ballot. Should the amendment pass, the exemption will be available in January 2013, Moret says.
What’s on the legislative agenda for the Jindal administration next year? Tax reform, simplifying the code and making it “more straightforward and more competitive,” Moret adds.
Industries And Innovation
There was a collective cheer in northwest Louisiana in February when Shreveport-based Moonbot Studios won the Academy Award for Best Animated Short Film. “The Fantastic Flying Books of Mr. Morris Lessmore” was the studio’s first project, and Moret says it’s a testament to Louisiana’s burgeoning digital-arts sector and the people who fuel it.
Game-development studio Gameloft already employs about 40 people at its new New Orleans studio, and Moret says the company is heading toward employment of 150 or more. “They’re getting close to launching their first game,” he says. “It’s been a great experience for them, one of their fastest ramp-ups of any of their studios in the world.” Also in New Orleans, GE Capital is establishing software-development operations and creating about 300 high-paying technology jobs. Telecommunications giant CenturyLink is growing in Monroe and adding more than 1,000 jobs.
“We have the strongest digital media tax-credit program in the country, both in terms of the size of the credit as well as the broad applicability of it,” Moret says. The program applies to any software development – for health care, mobile applications, enterprise software and for interactive digital devices like cell phones or laptops. “It’s also unique in that there is no cap on the value, and there’s no fade out,” Moret adds. “It’s a permanent operating-cost advantage.”
Oil and gas remains a booming Louisiana sector, with natural gas prompting several multibillion-dollar developments, both gas-to-liquid complexes and export terminals. That’s particularly true in southwest Louisiana. “Two projects are under way to retrofit plants to export Louisiana gas to the world. They were originally built to import gas from around the world into the U.S., but the business model has changed now with the discovery of the Haynesville Shale, the natural gas deposits in Louisiana,” says George Swift of the Southwest Louisiana Economic Development Alliance. He anticipates that about 3,000 construction jobs are being created and 150 permanent jobs will result when the projects are complete.
The Acadiana region, anchored by Lafayette, is enjoying the oil and gas boom, too. Rebecca Shirley, director of the Acadiana Economic Development Council, says the region offers industries “immediate access” to the Gulf of Mexico and the Gulf Intracoastal Waterway. “The old phrase ‘location, location, location’ could never be truer,” Shirley says. “Our ease of access to large ports, whether in Lake Charles, Baton Rouge or New Orleans, is very important for us.” Acadiana also boasts low-cost high-speed broadband “We are lucky that a majority of our region does have high-fiber access, even in the more rural areas,” she says.
Manufacturing is a Louisiana mainstay, and Moret says the state is putting substantial effort into growing an automotive sector. The state and several communities are working to ensure that sites are certified and ready to go. In fact, it’s Acadiana’s goal to identify 100 sites this year, Shirley says.
Tana Trichel with the Northeast Louisiana Economic Alliance says, “We are even tightening up our certification standards as we speak, so that we meet everybody’s criteria. We have an abundance of sites, and we have an abundance of water.” The region is home to the only state-owned megasite, at 1,440 acres, and Trichel says an additional 5,000 adjacent acres is available. She adds that a recent labor study revealed that about 29,000 underemployed residents with manufacturing experience live within a 90-miles radius of the site. The workforce in northeast Louisiana is one of the reasons cited by ConAgra when it opened phase one of its sweet-potato processing facility in Delhi two years ago, creating 275 jobs.
Talent And Education
The Louisiana Community and Technical College System has 14 two-year institutions statewide with a mission to help move people directly into the world of work. Coupled with the state’s FastStart workforce-training program, the result is a powerful partnership and one of the state’s top incentives.
Established when Jindal took office, FastStart “has become probably our single best economic-development tool in the toolbox. We can provide a high-quality, flexible, fully trained workforce better and faster than any other state in the country. Companies that are using it are just raving about it,” Moret says. The program is unique because it addresses both blue-collar and white-collar training.
Frank Fink, director of St. Mary Parish’s Office of Economic Development, says South Central Louisiana Technical College is a linchpin in the area’s economic success. Located in Morgan City, the college tailors training to the extensive shipbuilding and oil and gas industries there. “They are recognized as one of the top three marine institutes in the United States,” Fink says. The college offers curricula in marine operations and electronics, robotics, undersea welding and commercial diving and certifications for ship captains.
Fink says St. Mary Parish also has plans to partner with several colleges and universities to create an “eco-preneur” center, with demonstrations of green technologies from solar power to recycling water for hydroponics. “That facility will be the trigger for the classroom of the future and for developing these new technologies further,” Fink explains. “If these entrepreneurs develop it here, they’ll probably stay here.”
Louisiana’s transportation alternatives, including its ports, are a top asset. “We’ve been investing in cranes to help the Port of New Orleans expand their capacity,” Moret says. “They have already grown about 50 percent in volume in the last couple of years. We’re seeing tremendous growth in Louisiana in our imports and exports activity, both on the container side as well as bulk cargo.” In fact, that growth has prompted the establishment of the new Louisiana Office of International Commerce within LED.
England Airpark in Alexandria is an asset unto itself, with 1.1 million square feet of commercial space leased and all its 160 residential apartments leased. The development is a reuse of the former England Air Force Base. Executive Director John Grafton says more than 2,000 direct jobs and 6,000 indirect jobs in an eight-parish area are associated with the 3,000-acre development. “We continue to be a strategically located, multi-use transportation facility and business center,” Grafton says. “We have a core transportation function with an international-capable airfield. We have significant assets for heavy, medium and light industrial with our industrial park. We maintain a quality of life with our onsite living and our golf course and our hotel and restaurants. We are a smaller, rural version of what is known now as an aerotropolis.” The word “aerotropolis” was coined by author and professor John D. Kasarda and refers to urban development growing around an airport.
In the case of England Airpark, that airport is Alexandria International, which set a record last year for 189,000 enplanements. Recent investments to improve the airport total more than $40 million. England Airpark is home to Union Tank Car’s manufacturing facility, and Louisiana State University plans a $30 million investment to modernize the old base hospital.
From Cajun cooking and zydeco music to quiet living on lush farmland, Louisiana offers a flavor all its own. Louisiana also offers an indomitable spirit, according to Moret. When he accepted the position in 2008 to lead LED, he recalls, “I could not wrap my head around how we could be successful in New Orleans. The challenges were just so vast. Yet New Orleans has become not only the greatest turnaround story in Louisiana, but I think surely one of the great turnaround stories in America in the 21st century.”