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Regular Session, 2012
HOUSE BILL NO. 694
BY REPRESENTATIVE ROBIDEAUX
TAX/AD VALOREM-EXEMPTION: Establishes a program to authorize the granting of
ad valorem tax exemption contracts by the Board of Commerce and Industry for
certain businesses
AN ACT1
To enact Chapter 5 of Subtitle V of Title 47 of the Louisiana Revised Statutes of 1950, to2
be comprised of R.S. 47:4351 through 4355, relative to ad valorem taxation; to3
establish a program for the granting of ad valorem tax exemption contracts for4
certain businesses; to provide for the administration of the program; to provide for5
optional participation by parishes; to provide for eligibility for participation in the6
program; to authorize contracts under certain circumstances; to provide for contract7
terms, conditions, and limitations; to provide with respect to approval of contracts8
and notification of certain entities relative to contracts; to provide with respect to9
contract suspension and cancellation; to authorize rulemaking; to provide for10
effectiveness; and to provide for related matters.11
Be it enacted by the Legislature of Louisiana:12
Section 1. Chapter 5 of Subtitle V of Title 47 of the Louisiana Revised Statutes of13
1950, comprised of R.S. 47:4351 through 4355, is hereby enacted to read as follows:14
CHAPTER 5. CONTRACTS FOR BUSINESSES15
§4351. Definitions.16
For the purposes of this Chapter, the following terms shall have the meanings17
indicated unless the context clearly indicates otherwise:18
(1) "Board" means the State Board of Commerce and Industry or its19
successor.20 HLS 12RS-767 ENGROSSED
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(2) "Business" means any individual, firm, joint venture, association,1
corporation, estate, partnership, business trust, receiver, syndicate, or any other legal2
business entity.3
(3) "Department" means the Louisiana Department of Economic4
Development.5
(4) "Headquarters jobs" means executive, administrative, or professional6
jobs based at a principal or regional office located in Louisiana, in which are located7
the principal or regional executive officers normally constituting a principal or8
regional headquarters providing corporate governance. Such principal or regional9
executive officers include but shall not be limited to chief executive officer, chief10
operating officer, and other senior level officers or appropriate regional equivalents.11
(5) "Program" means the program provided for in this Chapter for the12
granting of ad valorem tax exemptions pursuant to the authority granted under13
Article VII, Section 21(L) of the Constitution of Louisiana.14
(6) "Qualified business" means a business certified by the secretary of the15
department as meeting the eligibility requirements of R.S. 47:4353 and approved to16
participate in the program.17
(7) "Secretary" means the secretary of the Department of Economic18
Development.19
(8) "Shared service center jobs" means jobs based at a business located in20
Louisiana that performs specific corporate operational tasks for the business or its21
affiliates or customers, such as accounting, human resources, payroll, or purchasing.22
§4352. Program administration; parishes23
A. There is hereby established a program for the granting of contracts for ad24
valorem tax exemptions for qualifying businesses with projects which, if located in25
Louisiana, are expected to yield significant positive economic benefit to the state.26
The program shall be implemented and administered by the Department of Economic27
Development and shall be available and operate in all parishes which have elected28
to participate therein. As provided in this Chapter, the program shall consist of an29 HLS 12RS-767 ENGROSSED
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application process for, and review, certification, approval, and oversight of contracts1
for ad valorem tax exemptions. In compliance with the Administrative Procedure2
Act, the department shall adopt and promulgate such rules as are necessary for the3
administration of this program.4
B.(1) The governing authority of any parish may elect to participate in the5
program by the adoption of a resolution or ordinance approving the granting of an6
ad valorem tax exemption for any of the following:7
(a) All projects recommended by the secretary and approved by the board8
and the governor;9
(b) All projects meeting specific criteria selected by the parish governing10
authority from a list of options proposed by the department; however, the authority11
may reserve the right to require its approval of any other specific project by12
subsequent resolution or ordinance;13
(c) On an individual project basis by subsequent resolution or ordinance.14
(2) An election to participate in the program shall not be deemed to end15
active negotiation for purposes of R.S. 44:22(C).16
(3) Participation in the program shall be for an indefinite term, but may be17
rescinded at any time by the parish governing authority. However, such rescission18
shall not affect existing contracts or renewals thereof, and shall be without effect as19
to any project previously approved by the parish for the ad valorem tax exemption20
by the parish, by any of the methods provided in Paragraph (1) of this Subsection,21
and for which an offer including the exemption has been made to a business by the22
department.23
C. The confidentiality granted under R.S. 44:22 shall extend to all24
documents and records in the possession of a parish governing authority for purposes25
of participation in the program.26
§4353. Eligibility requirements27
A. A business shall be eligible for particpation in the program if all of the28
following requirements are met:29 HLS 12RS-767 ENGROSSED
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(1) At least fifty percent of the total annual sales of the business from a1
Louisiana site or sites is to out-of-state customers or buyers, or to in-state customers2
or buyers but the product or service is resold by the purchaser to an out-of-state3
customer or buyer for ultimate use, or the federal government, or any combination4
thereof; and5
(2) The activities of the business at a Louisiana site or sites include or will6
include corporate headquarters, logistics, warehousing, data center, clean technology,7
destination health care, research and development, renewable energy, digital media8
and software development, or other business sector targeted by the secretary as a9
focus of the department's economic development efforts.10
(3) The business intends to either locate a project or undertake an expansion11
project in Louisiana, either of which shall entail a capital expenditure within12
Louisiana of at least twenty-five million dollars.13
B. The secretary, at his discretion, may include sales by affiliates of the14
business in determining the percentage of sales meeting the requirements of15
Paragraph (A)(1) of this Section.16
C. With the exception of a business providing at least twenty-five new17
headquarter jobs or shared service center jobs, a business primarily engaged in retail18
sales, real estate, professional services, natural resource extraction or exploration,19
financial services, or venture capital funds, shall not be eligible for this program. No20
business engaged in gaming or gambling shall be eligible for the program.21
§4354. Application and recommendation22
A. At the invitation of the secretary or parish governing authority, a qualified23
business may apply for a contract based on a project located in a parish participating24
in the program. Application shall consist of submission by the business to the25
department such certified statements and substantiating documents as the department26
may require. The secretary shall only consider applications for projects which entail27
a capital investment in Louisiana of at least twenty-five million dollars. At his28 HLS 12RS-767 ENGROSSED
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discretion, he may recommend the project of a qualified business for a contract in1
either of the following circumstances:2
(1) The granting of a contract would be advantageous in the case of a3
competitive site selection situation so as to encourage a new business to locate its4
project in the state.5
(2) The granting of a contract would encourage an existing business to locate6
a competitive expansion project in the state.7
B. The secretary's recommendation shall include proposed contract terms8
and conditions. A contract shall include at a minimum the following terms:9
(1) An initial term of no more than five calendar years with, at the option of10
the secretary and the board a renewal of up to an additional five years.11
(2) Requirements for specific performance and reporting thereof.12
(3) Audits and review of performance.13
(4) Provisions governing the consequences for failure to perform or other14
contract violations.15
§4355. Approval of contract; contract administration16
A.(1) If the project is located in a parish which requires the approval of each17
proposed contract by the parish governing authority pursuant to R.S.18
47:4352(B)(1)(c), the secretary shall submit the proposed contract to the authority.19
If approved, the proposed contract shall then be submitted by the secretary to the20
board and the governor for approval.21
(2) If the project is located in a parish which does not require parish22
approval of each contract, the secretary shall submit the proposed contract to the23
board and the governor for approval.24
(3) Upon approval by the governor, the secretary shall execute the contract25
and provide a copy of the contract to the assessor and the parish governing authority26
of the respective parish. The secretary shall notify the assessor and parish governing27
authority when an existing contract expires, is suspended, or is cancelled.28 HLS 12RS-767 ENGROSSED
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B. In the event the secretary determines that a business has failed to meet the1
eligibility requirements of the program or the performance objectives of the contract,2
the secretary may, at his discretion, suspend or cancel the contract. A contract3
suspension would remove the exemption for the tax year in which the failure4
occurred. A contract cancellation would remove the exemption for the tax year in5
which it occurred and all future years. Upon receipt of notification from the6
secretary that a contract was suspended or cancelled, the assessor shall adjust the7
property assessment in the manner provided by law. Taxes becoming due for a prior8
year due to removal of an exemption shall, at the discretion of the tax collector, be9
collectable immediately or with the taxes for the current year.10
Section 2. This Act shall take effect and become operative for all taxable years11
commencing after the proposed amendment adding Article VII, Section 21(L) of the12
Constitution of Louisiana contained in the Act which originated as House Bill No. ___ of13
this 2012 Regular Session of the Legislature is adopted at the statewide election to be held14
on November 6, 2012, and becomes effective.15
DIGEST
The digest printed below was prepared by House Legislative Services. It constitutes no part
of the legislative instrument. The keyword, one-liner, abstract, and digest do not constitute
part of the law or proof or indicia of legislative intent. [R.S. 1:13(B) and 24:177(E)]
Robideaux HB No. 694
Abstract: Authorizes the State Board of Commerce and Industry to enter into ad valorem
tax exemption contracts with certain businesses which locate or expand a project in
La. which includes at least $25 million in capital investments.
Present constitution and present law authorize political subdivisions of the state to impose
ad valorem taxes.
Proposed law retains present law and establishes a program for the granting of contracts for
ad valorem tax exemptions by the Board of Commerce and Industry (hereinafter board) for
business projects which entail capital investments in excess of $25 million which, if located
in La., are expected to yield significant positive economic benefit to the state. The program
shall be implemented and administered by the Dept. of Economic Development (hereinafter
department) and shall be available and operate in all parishes which have elected to
participate therein.
Proposed law provides definitions for purposes of proposed law.
Proposed law provides for optional participation in the program by parish governments. A
parish may choose to participate in the program and approve the granting of ad valorem tax HLS 12RS-767 ENGROSSED
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exemptions on the following manner: approval of all projects recommended by the
department, or all projects recommended by the department which meet specific criteria
determined by the parish, or on a case by case basis.
Proposed law provides that the election to participate in the program by a parish governing
authority shall be evidenced by the adoption of a resolution or ordinance. Participation in
the program shall be for an indefinite term, and may be rescinded at any time by the parish
governing authority. A parish's withdrawal from the program shall not affect existing
contracts or renewals thereof.
Proposed law provides the criteria for eligibility of a business to participation in the
program:
(1)A business which has at least 50% of the total annual sales from a La. site or sites is
to out-of-state customers or buyers, in-state customers or buyers but the product or
service is resold by the purchaser to an out-of-state customer or buyer for ultimate
use, or the federal government, or any combination thereof; and
(2)The activities of the business at a La. site or sites include corporate headquarters,
logistics, warehousing, data center, clean technology, destination health care,
research and development, renewable energy, digital media and software
development, or other business sector targeted by the secretary as a focus of the
department's economic development efforts.
(3)The business intends to either locate a project or undertake an expansion project in
La., either of which shall entail a capital expenditure of at least $25 million.
Proposed law further provides that the secretary, at his discretion, may include sales by
affiliates of the business in determining the percentage of sales meeting the requirements for
eligibility.
Proposed law provides that the following types of business are ineligible for participation
in the program:
(1)With the exception of a business providing at least 25 new headquarter jobs or shared
service center jobs, a business primarily engaged in retail sales, real estate,
professional services, natural resource extraction or exploration, financial services,
or venture capital funds.
(2)Businesses engaged in gaming or gambling.
Proposed law provides that a business may apply for a contract upon invitation of the
secretary or the parish governing authority. The application shall consist of the business
furnishing to the department such certified statements and substantiating documents as the
department may require.
Proposed law authorizes the secretary, at his discretion, to recommend a business project
which entails a capital investment in La. of at least $25 million for a contract in either of the
following circumstances:
(1)The granting of a contract would be advantageous in the case of a competitive site
selection situation so as to encourage a new business to locate its project in the state.
(2)The granting of a contract would encourage an existing business to locate an
expansion project in the state. HLS 12RS-767 ENGROSSED
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Proposed law provides that the terms of a contract shall be recommended by the secretary
and provides for minimum contract terms with respect to duration, performance, audits, and
violations.
Proposed law requires approval of each contract by the board and the governor, and in
certain circumstances by the parish governing authority.
Proposed law requires that approved contracts be sent by the secretary to the assessor and
governing authority of the respective parish. Such parties shall also be notified by the
secretary if a contract expires, is suspended, or cancelled.
Proposed law authorizes the secretary to suspend or cancel a contract if it is determined that
a business has failed to meet the eligibility requirements of the program or the performance
objectives of the contract. A contract suspension would remove the exemption for the tax
year in which the failure occurred. A contract cancellation would remove the exemption for
the tax year in which it occurred and all future years. Upon receipt of notification from the
secretary that contract was suspended or cancelled, the assessor shall adjust the property
assessment in the manner provided by law. Taxes becoming due for a prior year due to
removal of an exemption shall, at the discretion of the tax collector, be collectable
immediately or with the taxes for the current year.
Proposed law authorizes the rulemaking by the department in accordance with the
Administrative Procedure Act.
Effective for all taxable years commencing after the constitutional amendment proposed in
House Bill No. ___ of this 2012 R.S. is adopted and becomes effective.
(Adds R.S. 47:4351-4355)
Summary of Amendments Adopted by House
Committee Amendments Proposed by House Committee on Ways and Means to the
original bill.
1. Added requirement that a project include at least $25 million in capital
investments in La.
2. Deleted the 24 month waiting period for effectiveness of a parish's
discontinuation of participation in the program.
3. Added specific circumstances under which a parish may indicate its approval of
ad valorem tax exemption contracts for certain businesses.
4. Added authorization for a parish governing authority to invite an eligible
business to apply for a tax exemption contract.
5. Added provisions for the approval of specific ad valorem tax exemption
contracts by a parish governing authority.