Metal Shark OK'd for tax incentive despite School Board vote
Metal Shark could receive a property tax exemption on a modest expansion in St. Mary despite a School Board vote denying the shipbuilder’s application under the state’s Industrial Tax Exemption Program.
The St. Mary Parish School Board’s Dec. 9 vote against the tax exemption appears to have come too late under ITEP rules.
“[Louisiana Economic Development] has no record of a response from the school board to the ... application during that 30-day period,” said LED Director of Communications Mark Lorando via email Thursday. “The application was deemed automatically approved per ITEP rule on Nov. 28, 2021.”
The number of jobs and the tax revenue involved are relatively small. But the handling of Metal Shark’s exemption request raises questions about whether rules designed to give local governments more say in the process had the opposite effect, and who was responsible for notifying whom about deadlines for taking action.
Gravois Aluminum Boats LLC, which does business as Metal Shark Boats, applied for and, on Oct. 27, received state Board of Commerce and Industry approval for ITEP incentives on its expansion.
According to information from the St. Mary Parish government administration, the proposed expansion would result in two new jobs with an annual payroll of $73,000.
The program exempts a new industry or an expanding industry from 80% of the property taxes that would otherwise be owed to local governments for five years with an option for five additional years. In return, the business commits to maintaining the new jobs on which the application is based.
The state board as well as local governments that levy property taxes where the new industry or expansion occurs must approve the application for ITEP incentives..
The Sheriff’s Office, parish government and Franklin approved the exemption for Metal Shark’s expansion, Parish President David Hanagriff and Economic Development Director Evan Boudreaux told the School Board on Dec. 9.
That night, the School Board rejected the exemption by a voice vote, largely on concern about the small size of the expansion and whether it would benefit St. Mary workers or those from outside the parish.
“We support the new businesses with the exemptions,” School Board President Kenneth Alfred told The Review on Thursday. “But we’ve got some serious questions about the add-ons.”
By “add-ons,” he referred to expansions at existing businesses.
After the School Board meeting, Boudreaux talked about going to the Board of Commerce and Industry to see whether Metal Shark could receive the exemptions from Franklin, the parish and the sheriff without the exemption from the School Board.
But on Thursday, Boudreaux told The Review that Metal Shark is entitled to the full exemption under ITEP rules. Those rules require action by the local governments within 30 days of Board of Commerce and Industry approval.
The School Board vote came on the 43rd day after the state board gave its OK.
The ITEP rules also say that during those 30 days, the local government can receive an extra 30 days to decide if the question is placed on a meeting agenda for discussion. The Review received the agenda for the Dec. 9 School Board meeting Dec. 3, or the 37th day after state approval.
“If a local governmental entity does not take action or provide notice as required herein,” according to a copy of the rules from Louisiana Economic Development, “then the application will be deemed to have been approved by that entity.”
Boudreaux said he was copied on a Nov. 1 email from the state about the approval of the Gravois application, an email that also went to the St. Mary School Board’s Central Office and to other local officials.
“I’m sure there were other things [the School Board] was focused on,” Boudreaux said. But he believes it was up to the board to exercise what he called due diligence.
The School Board president sees things differently.
Alfred pointed to November emails between Boudreaux and Superintendent Dr. Teresa Bagwell citing the difficulty in preparing a presentation for the School Board in time for the Nov. 11 meeting and agreeing that the presentation could happen Dec. 9.
“We feel they should have made us aware if there was a deadline,” Alfred said in an interview Thursday.
School and parish officials met to talk about the exemption Dec. 2, a week before the School Board’s vote, Alfred said. And then Hanagriff and Boudreaux appeared at the Dec. 9 meeting.
“Why did they come to us if they knew we were past the deadline? …” Alfred said.
“I would hope they didn’t realize we were past the deadline.”
With the ITEP incentives in place, the four governmental entities that would levy taxes on the expansion would collect about $27,000 as a result of the Metal Shark expansion over 10 years, according to figures presented to the School Board by Hanagriff and Boudreaux.
The exemption would save Gravois about $99,000 over those 10 years. The exemption doesn’t cover about $42,000 in sales taxes on first-year purchases resulting from the expansion.
The School Board would receive about $11,000 in property taxes while giving up $43,000 during the 10 years.
Before 2016, the Industrial Tax Exemption Program drew fire from critics who said state officials handed out too many exemptions, to the detriment of local governments that gave up tax revenue, and did too little follow-up to make sure the promised jobs materialize.
Since 2016, the ITEP rules have been changed to require approval by local governments affected by exemptions.
Hanagriff said the need to seek approval from multiple government boards might discourage potential employers who want to participate in ITEP. So he obtained approval from the local governments that might be affected by future ITEP incentives to make an approval decision on his own, provided the parish’s economic analysis showed a positive benefit.
Hanagriff told the School Board on Dec. 9 that the analysis for the Metal Shark expansion showed a small negative impact, so he sought approval from the sheriff, Franklin and the School Board individually.
