HLS 19RS-138 ORIGINAL
2019 Regular Session
HOUSE RESOLUTION NO. 207
BY REPRESENTATIVE GLOVER
CONGRESS: Memorializes the United States Congress to investigate the current condition
of economic development in the state of Louisiana concerning the RACER Trust's
fulfillment of fiduciary obligations regarding the former General Motors Shreveport
plant and its operations
1 A RESOLUTION
2To memorialize the United States Congress to take such actions as are necessary to
3 investigate the current condition of economic development in the state of Louisiana
4 concerning the Revitalizing Auto Communities Environmental Response Trust's
5 (hereinafter "RACER Trust") fulfillment of fiduciary duties regarding the former
6 General Motors Shreveport plant (hereinafter "GM-Shreveport plant") and its
7 operations.
8 WHEREAS, in 2008, the United States' domestic automotive industry was on the
9verge of collapse; and
10 WHEREAS, in recognition of the impending collapse, groups of interested parties,
11including impacted communities, coalesced around common goals geared toward preventing
12the collapse of and preserving General Motors, the most important component of United
13States-based automobile manufacturing; and
14 WHEREAS, these groups were adamant and vocal and took the lead in calling for
15federal intervention to prevent the collapse of the industry; and
16 WHEREAS, these groups also advocated for assistance and protection for the local
17communities that would ultimately be impacted by the seismic shifts taking place within the
18domestic 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
23ultimately controlled 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, relative to the former
27GM-Shreveport plant; however, Elio Motors purchased only the movable property and as
28such, entered into a security agreement with the RACER Trust in the amount of twenty-three
29million 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, Elio Motors has not engaged in automobile manufacturing
16at the former GM-Shreveport plant, and as a result, related economic development and
17stimulated growth in this state have not materialized as projected and desired; and
18 WHEREAS, at the time that Mr. Rasher extended the option for Mr. Elio to purchase
19the GM-Shreveport plant and its assets, Mr. Elio was in substantial debt with a failing
20engineering firm, was subject to substantial tax liens, and was in active search of
21employment; and
22 WHEREAS, Mr. Stuart Lichter, CEO of Industrial Realty Group, who ultimately
23gained control of the former GM-Shreveport plant, described and outlined the plant's worth
24at an Elio Motors press conference on January 13, 2013; and
25 WHEREAS, Mr. Lichter said the GM-Shreveport plant "was probably the most
26modern car plant in America", and further stated, "It's fully equipped and the amount of
27money it saves in start-up costs, I can't even calculate, but it's something like five hundred
28million dollars of equipment sitting in this plant, and you just turn it on!"; and
29 WHEREAS, in fact, less than a decade earlier, General Motors doubled the size of
30the GM-Shreveport plant and invested almost two billion dollars in the process; and
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1 WHEREAS, despite the substantial manufacturing potential of the GM-Shreveport
2plant and all of the previous failures of Mr. Elio, Mr. Rasher and the RACER Trust first gave
3Mr. Elio an exclusive option to buy the plant and all of its equipment; and
4 WHEREAS, despite the acknowledged manufacturing potential of the plant, Mr.
5Rasher spoke to the members of the Caddo Parish Commission almost exclusively about the
6salvage value of the GM-Shreveport plant, as opposed to its utilization for continued
7manufacturing; and
8 WHEREAS, the parish administrator and former president of the Caddo Parish
9Commission both publicly stated that Mr. Rasher's statement to them essentially provided
10two options:
11 (1) Cooperate with the Industrial Realty Group's and Elio Motors' occupancy and use
12of the plant.
13 (2) Complete demolition of the plant; and
14 WHEREAS, the option and threat of demolition was likely unwarranted based on the
15stated value and potential of the plant; and
16 WHEREAS, the conduct of Mr. Rasher and other staff of the RACER Trust denied
17the people of Caddo Parish and the state of Louisiana the opportunity for a reasonable and
18appropriate due diligence process for determining how the former GM-Shreveport plant
19would be used to replace the jobs lost by the plant's closure; and
20 WHEREAS, an industrial development board, created by the Louisiana Legislature,
21was used to facilitate the current status of the plant; and
22 WHEREAS, certain aspects of the current lease agreement in place between the
23Caddo Parish Industrial Development Board and the Industrial Realty Group could
24potentially violate Article VII, Section 14(A) of the Constitution of Louisiana; and
25 WHEREAS, such provisions potentially in violation of the constitution may have
26become effective as recently as November 2018; and
27 WHEREAS, Article VII, Section 14(A) of the Constitution of Louisiana describes
28prohibited uses with respect to donations, loans, or pledges of public credit and provides in
29pertinent part: "Except as otherwise provided by this constitution, the funds, credit, property,
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1or things of value of the state or of any political subdivision shall not be loaned, pledged, or
2donated to or for any person, association, or corporation, public or private."; and
3 WHEREAS, it is a matter of state interest and concern that the prospect of the former
4GM-Shreveport plant's demise may have actually been a false threat used as a catalyst to
5urge the Caddo Parish Commission and other local and state economic development officials
6to support and commit the former GM-Shreveport plant into the contractual care of
7Industrial Realty Group and Elio Motors; and
8 WHEREAS, this matter of state interest and concern warrants further investigation
9into the provisions of this state's industrial development board statutes provided in Chapters
107 and 8 of Title 51 of the Louisiana Revised Statutes of 1950 and Article VII, Section 14(A)
11of the Constitution of Louisiana to determine the following:
12 (1) The purpose and intended use of industrial development boards incorporated by
13municipalities and parishes in the state of Louisiana.
14 (2) Whether powers thereof or the manners of use of such boards have potential to
15create an unintended consequence of use of public property and resources contrary to the
16best interests of the citizens of Louisiana.
17 (3) How the Caddo Parish Industrial Development Board may have been used to
18create a contract contrary to the best use of the GM-Shreveport plant.
19 (4) Whether certain provisions of the current lease agreement for the GM-Shreveport
20plant may result in a prohibited use of state property as described in Article VII, Section
2114(A) of the Constitution of Louisiana; and
22 WHEREAS, in light of the dire circumstances surrounding the former
23GM-Shreveport plant, the state is compelled to examine the process of negotiations which
24resulted in Industrial Realty Group's and Elio Motors' attainment of the former
25GM-Shreveport plant, per the recommendation of the RACER Trust; and
26 WHEREAS, contingent upon the findings of the subcommittee, the Legislature of
27Louisiana and the Department of Economic Development may be equipped with
28indispensable, essential information for the creation of improved policy to better regulate
29and safeguard with respect to negotiations expected to further the state's policy of protecting
30the welfare and future prosperity of its citizens; and
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1 WHEREAS, it is appropriate that the subcommittee examine any potential breach of
2fiduciary duties or obligations which may have resulted in this state's lost opportunities for
3substantial economic development; and
4 WHEREAS, the assets of the former GM-Shreveport plant possess great potential
5to be a source of real opportunity for economic growth and job creation in Louisiana, but
6although publicly owned, no provisions or mechanisms for local oversight are in place to
7rectify this agreement made in furtherance of the state's economic development that has not
8materialized to provide an economic benefit to this state; and
9 WHEREAS, House Rule 14.51 pertinently states the following: "Each standing
10committee...each joint committee...and any subcommittee of such standing or joint
11committee is hereby specifically and expressly granted the power and authority to hold
12hearings, subpoena witnesses, administer oaths, require the production of books and records,
13and to do all other things necessary to accomplish the purposes of the study or investigation
14assigned to it by the House or by the legislature or by a majority of the members of the
15committee".
16 THEREFORE, BE IT RESOLVED that the House of Representatives of the
17Legislature of Louisiana does hereby memorialize the United States Congress to take such
18actions as are necessary to investigate the current condition of economic development in the
19state of Louisiana relative to the RACER Trust's fulfillment of fiduciary duties concerning
20the former GM-Shreveport plant and its operations.
21 BE IT FURTHER RESOLVED that a copy of this Resolution be transmitted to the
22presiding officers of the Senate and the House of Representatives of the Congress of the
23United States of America and to each member of the Louisiana congressional delegation.
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 207 Original 2019 Regular Session Glover
Memorializes the U.S. Congress to investigate the current condition of economic
development in the state of La. concerning the RACER Trust's fulfillment of fiduciary duties
regarding the former GM-Shreveport plant and its operations.
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