HLS 183ES-35 ORIGINAL
2018 Third Extraordinary Session
HOUSE RESOLUTION NO. 6
BY REPRESENTATIVE GLOVER
COMMERCE: Provides for examination relative to the fiduciary duties of the RACER trust
and constitutionality of the current lease agreement for the General Motors
Shreveport plant
1 A RESOLUTION
2TToo create and provide for a subcommittee of the House Committee on Commerce to
3 examine certain matters relative to the Revitalizing Auto Communities
4 Environmental Response Trust's (hereinafter "RACER Trust") fulfillment of
5 fiduciary duties concerning the former General Motors Shreveport plant (hereinafter
6 "GM-Shreveport plant") and operations, and to determine whether provisions of the
7 GM-Shreveport plant lease agreement violate Article VII, Section 14(A) of the
8 Constitution of Louisiana.
9 WHEREAS, in 2008, the United States' domestic automotive industry was on the
10verge of collapse; and
11 WHEREAS, in recognition of the impending collapse, groups of interested parties,
12including impacted communities, coalesced around common goals geared toward preventing
13the collapse of and preserving General Motors, the most important component of United
14States' based automobile manufacturing; and
15 WHEREAS, these groups were adamant and vocal and took the lead in calling for
16federal intervention to prevent the collapse of the industry; and
17 WHEREAS, these groups also advocated for assistance and protection for the local
18communities that would ultimately be impacted by the seismic shifts taking place within the
19domestic automotive industry; and
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1 WHEREAS, amongst these advocacy groups was the Mayors and Municipalities
2Automotive Coalition based in Washington, D.C., and comprised of local officials in
3automotive communities around the country; and
4 WHEREAS, continued advocacy specifically resulted in a forty-nine billion dollar
5assistance package from the federal government to the benefit of General Motors; and
6 WHEREAS, the General Motors bankruptcy resulted in eighty-nine former General
7Motors properties being entrusted to the RACER Trust for the sole purpose of using and
8leveraging those assets to replace the jobs lost in communities where General Motors plants
9were closed and shuttered; and
10 WHEREAS, from the forty-nine billion dollar assistance package, more than six
11hundred million dollars was set aside to fulfill the mission of the RACER Trust; and
12 WHEREAS, approved uses for RACER Trust funds for administrative expenses, as
13stated in Article 1, Section 1.1.1 of the trust agreement are, "including but not limited to
14property taxes, liability insurance, security, personnel costs, utilities, maintenance,
15professional fees, property marketing costs..."; and
16 WHEREAS, all expenses associated with the former GM-Shreveport plant were paid
17by the new post bankruptcy General Motors until December 31, 2012; and
18 WHEREAS, despite having access to resources that would have covered all carrying
19expenses and allowed for an unrushed and deliberate due diligence process, the RACER
20Trust, at the direction of its Redevelopment Manager, Mr. Bruce Rasher, announced in the
21first week of January 2013, less than one week after the official exit of General Motors from
22the state of the art GM-Shreveport plant, that the facility would be optioned to and ultimately
23controlled by Mr. Paul Elio and Elio Motors; and
24 WHEREAS, during February 2013, the RACER Trust and Elio Motors entered into
25a Purchase and Sale Agreement whereby Elio Motors was expected to acquire from the
26RACER Trust all of the property, both movable and immovable property, relative to the
27former GM-Shreveport plant; however, Elio Motors purchased only the movable property
28and as such, entered into a Security Agreement with the RACER Trust in the amount of
29twenty-three million dollars to acquire the movable property; and
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1 WHEREAS, circumstances changed regarding the sale of all of the former
2GM-Shreveport plant to Elio Motors; instead, the immovable property of the plant was
3purchased by the Caddo Parish Industrial Development Board; and
4 WHEREAS, at the request of the Caddo Parish Industrial Development Board, a
5parent company known as Industrial Realty Group first purchased the immovable property
6of the former GM-Shreveport plant and immediately resold this same property to the Caddo
7Parish Industrial Development Board; and
8 WHEREAS, the Caddo Parish Industrial Development Board then leased the
9immovable property back to Industrial Realty Group; and
10 WHEREAS, as the lessee and property manager of the former GM-Shreveport plant,
11Industrial Realty Group next subleased a portion of the plant to Elio Motors; and
12 WHEREAS, Elio Motors assumed the plant as a sublessee during the latter part of
132013 and was expected to manufacture automobiles, stimulate economic growth, and create
14approximately one thousand five hundred jobs by the end of 2015; and
15 WHEREAS, since 2013 and currently, Elio Motors is not engaged in automobile
16manufacturing at the former GM-Shreveport plant, and as a result, related economic
17development and stimulated growth in this state have not materialized as projected and
18desired; and
19 WHEREAS, at the time that Mr. Rasher extended the option for Mr. Elio to purchase
20the GM-Shreveport plant and its assets, Mr. Elio was in substantial debt with a failing
21engineering firm, was subject to substantial tax liens, and was in active search of
22employment; and
23 WHEREAS, Mr. Stuart Lichter, CEO of Industrial Realty Group, who ultimately
24gained control of the former GM-Shreveport plant, described and outlined the plant's worth
25at an Elio Motors press conference on January 13, 2013; and
26 WHEREAS, Mr. Lichter said the GM-Shreveport plant "was probably the most
27modern car plant in America", and further stated, "It's fully equipped and the amount of
28money it saves in start-up costs, I can't even calculate, but its something like five hundred
29million dollars of equipment sitting in this plant, and you just turn it on!"; and
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1 WHEREAS, in fact, less than a decade earlier, General Motors doubled the size of
2the GM-Shreveport plant and invested almost two billion dollars in the process; and
3 WHEREAS, despite the substantial manufacturing potential of the GM-Shreveport
4plant and all of the previous failures of Mr. Elio, Mr. Rasher and the RACER Trust first gave
5Mr. Elio an exclusive option to buy the plant and all of its equipment; and
6 WHEREAS, despite the acknowledged manufacturing potential of the plant, Mr.
7Rasher spoke to the members of the Caddo Parish Commission almost exclusively about the
8salvage value of the GM-Shreveport plant, as opposed to its utilization for continued
9manufacturing; and
10 WHEREAS, the parish administrator and former president of the Caddo Parish
11Commission both publicly stated that Mr. Rasher's statement to them essentially provided
12two options:
13 (1) Cooperate with the Industrial Realty Group's and Elio Motors' occupancy and
14use of the plant.
15 (2) Complete demolition of the plant; and
16 WHEREAS, the option and threat of demolition was likely unwarranted based on the
17stated value and potential of the plant; and
18 WHEREAS, the conduct of Mr. Rasher and other staff of the RACER Trust denied
19the people of Caddo Parish and the state of Louisiana the opportunity for a reasonable and
20appropriate due diligence process for determining how the former GM-Shreveport plant
21would be used to replace the jobs lost by the plant's closure; and
22 WHEREAS, an industrial development board, created by the Louisiana Legislature,
23was used to facilitate the current status of the plant; and
24 WHEREAS, certain aspects of the current lease agreement in place between the
25Caddo Industrial Development Board and the Industrial Development Group could
26potentially violate Article VII, Section 14(A) of the Constitution of Louisiana; and
27 WHEREAS, such provisions potentially in violation of the constitution could become
28effective as early as November, 2018; and
29 WHEREAS, Article VII, Section 14(A) of the Constitution of Louisiana describes
30prohibited uses with respect to donations, loans, or pledges of public credit and provides in
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1pertinent part: "Except as otherwise provided by this constitution, the funds, credit, property,
2or things of value of the state or of any political subdivision shall not be loaned, pledged, or
3donated to or for any person, association, or corporation, public or private."; and
4 WHEREAS, it is a matter of state interest and concern that the prospect of the former
5GM-Shreveport plant's demise may have actually been a false threat used as a catalyst to
6urge the Caddo Parish Commission and other local and state economic development officials
7to support and commit the former GM-Shreveport plant into the contractual care of
8Industrial Realty Group and Elio Motors; and
9 WHEREAS, this matter of state interest and concern warrants further investigation
10into the provisions of this state's industrial development board statutes provided in Chapters
117 and 8 of Title 51 of the Louisiana Revised Statutes of 1950 and Article VII, Section
12(14)(A) of the Constitution of Louisiana to determine the following:
13 (1) The purpose and intended use of industrial development boards incorporated by
14municipalities and parishes in the state of Louisiana.
15 (2) Whether powers thereof or the manners of use of such boards have potential to
16create an unintended consequence of use of public property and resources contrary to the
17best interests of the citizens of Louisiana.
18 (3) How the Caddo Parish Industrial Development Board may have been used to
19create a contract contrary to the best use of the GM-Shreveport plant.
20 (4) Whether certain provisions of the current lease agreement for the GM-Shreveport
21plant may result in a prohibited use of state property as described in Article VII, Section
2214(A) of the Constitution of Louisiana; and
23 WHEREAS, in light of the dire circumstances surrounding the former
24GM-Shreveport plant, the state is compelled to examine the process of negotiations which
25resulted in Industrial Realty Group's and Elio Motors' attainment of the former
26GM-Shreveport plant, per the recommendation of the RACER Trust; and
27 WHEREAS, contingent upon the findings of the subcommittee, the Legislature of
28Louisiana and the Department of Economic Development may be equipped with
29indispensable, essential information for the creation of improved policy to better regulate
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1and safeguard with respect to negotiations expected to further the state's policy of protecting
2the welfare and future prosperity of its citizens; and
3 WHEREAS, it is appropriate that the subcommittee examine any potential breach of
4fiduciary duties or obligations which may have resulted in this state's lost opportunities for
5substantial economic development; and
6 WHEREAS, the assets of the former GM-Shreveport plant possess great potential
7to be a source of real opportunity for economic growth and job creation in Louisiana, but
8although publicly owned, no provisions or mechanisms for local oversight are in place to
9rectify this agreement made in furtherance of the state's economic development that has not
10materialized to provide an economic benefit to this state; and
11 WHEREAS, House Rule 14.51 pertinently states the following: "Each standing
12committee...each joint committee...and any subcommittee of such standing or joint
13committee is hereby specifically and expressly granted the power and authority to hold
14hearings, subpoena witnesses, administer oaths, require the production of books and records,
15and to do all other things necessary to accomplish the purposes of the study or investigation
16assigned to it by the House or by the legislature or by a majority of the members of the
17committee."
18 THEREFORE, BE IT RESOLVED that the House of Representatives of the
19Legislature of Louisiana does hereby create a subcommittee of the House Committee on
20Commerce to further investigate and examine certain matters relative to the RACER Trust's
21fulfillment of fiduciary duties concerning the former GM-Shreveport plant and operations.
22 BE IT FURTHER RESOLVED that the subcommittee shall, nonexclusively,
23investigate the process by which the RACER Trust and its representatives chose the current
24lessee and occupant of the GM-Shreveport plant, determine the statutory use, powers, and
25functions of industrial development boards, determine whether the use of the Caddo Parish
26Industrial Development Board relative to the GM-Shreveport plant created an unintended
27consequence concerning the public property and resources of this state, and to determine
28whether certain provisions of the lease agreement for the GM-Shreveport plant may result
29in a prohibited use of state property as provided by the constitution of this state.
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1 BE IT FURTHER RESOLVED that the chairman of the House Committee on
2Commerce shall appoint the members of the subcommittee and designate the chairman and
3vice chairman of the subcommittee.
4 BE IT FURTHER RESOLVED that the subcommittee shall be responsible for
5examining all matters relating to the RACER Trust's fulfillment of fiduciary duties and any
6related issues that the subcommittee deems appropriate and necessary to discharge its duties
7and responsibilities.
8 BE IT FURTHER RESOLVED that the subcommittee may request and utilize the
9assistance of any and all public and private sources and may call upon the staff of any
10department, agency, or official of the state for data and assistance, and all such departments,
11agencies, and officials shall cooperate with the subcommittee for its intended purposes.
12 BE IT FURTHER RESOLVED that the subcommittee shall make a report of its
13findings and recommendations, including proposed legislation, to the House Committee on
14Commerce no later than thirty days prior to the convening of the 2019 Regular Session.
15 BE IT FURTHER RESOLVED that the subcommittee shall be dissolved upon the
16adjournment sine die of the 2019 Regular Session of the Legislature of Louisiana.
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)]
HR 6 Original 2018 Third Extraordinary Session Glover
Creates and provides for a subcommittee of the House Committee on Commerce to further
examine certain matters relative to the Revitalizing Auto Communities Environmental
Response Trust's fulfillment of fiduciary duties concerning the former General Motors
Shreveport plant and operations.
Requires the subcommittee to make certain determinations regarding industrial development
boards and the constitutionality of the current lease agreement for the General Motors
Shreveport plant.
Requires the subcommittee to make a report of its findings and recommendations, including
proposed legislation, to the committee at least 30 days prior to the 2019 R.S.
Provides that the subcommittee is dissolved upon the adjournment sine die of the 2019 R.S.
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