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2019 Regular Session
HOUSE RESOLUTION NO. 207
BY REPRESENTATIVE GLOVER
A RESOLUTION
To memorialize the United States Congress to take such actions as are necessary to
investigate the current condition of economic development in the state of Louisiana
concerning the Revitalizing Auto Communities Environmental Response Trust's
(hereinafter "RACER Trust") fulfillment of fiduciary duties regarding the former
General Motors Shreveport plant (hereinafter "GM-Shreveport plant") and its
operations.
WHEREAS, in 2008, the United States' domestic automotive industry was on the
verge of collapse; and
WHEREAS, in recognition of the impending collapse, groups of interested parties,
including impacted communities, coalesced around common goals geared toward preventing
the collapse of and preserving General Motors, the most important component of United
States-based automobile manufacturing; and
WHEREAS, these groups were adamant and vocal and took the lead in calling for
federal intervention to prevent the collapse of the industry; and
WHEREAS, these groups also advocated for assistance and protection for the local
communities that would ultimately be impacted by the seismic shifts taking place within the
domestic automotive industry; and
WHEREAS, amongst these advocacy groups was the Mayors and Municipalities
Automotive Coalition based in Washington, D.C., and comprised of local officials in
automotive communities around the country; and
WHEREAS, continued advocacy specifically resulted in a forty-nine billion dollar
assistance package from the federal government to the benefit of General Motors; and
WHEREAS, the General Motors bankruptcy resulted in eighty-nine former General
Motors properties being entrusted to the RACER Trust for the sole purpose of using and
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leveraging those assets to replace the jobs lost in communities where General Motors plants
were closed and shuttered; and
WHEREAS, from the forty-nine billion dollar assistance package, more than six
hundred million dollars was set aside to fulfill the mission of the RACER Trust; and
WHEREAS, approved uses for RACER Trust funds for administrative expenses, as
stated in Article 1, Section 1.1.1 of the trust agreement are, "including but not limited to
property taxes, liability insurance, security, personnel costs, utilities, maintenance,
professional fees, property marketing costs..."; and
WHEREAS, all expenses associated with the former GM-Shreveport plant were paid
by the new post bankruptcy General Motors until December 31, 2012; and
WHEREAS, despite having access to resources that would have covered all carrying
expenses and allowed for an unrushed and deliberate due diligence process, the RACER
Trust, at the direction of its Redevelopment Manager, Mr. Bruce Rasher, announced in the
first week of January 2013, less than one week after the official exit of General Motors from
the state-of-the-art GM-Shreveport plant, that the facility would be optioned to and
ultimately controlled by Mr. Paul Elio and Elio Motors; and
WHEREAS, during February 2013, the RACER Trust and Elio Motors entered into
a purchase and sale agreement whereby Elio Motors was expected to acquire from the
RACER Trust all of the property, both movable and immovable, relative to the former
GM-Shreveport plant; however, Elio Motors purchased only the movable property and as
such, entered into a security agreement with the RACER Trust in the amount of twenty-three
million dollars to acquire the movable property; and
WHEREAS, circumstances changed regarding the sale of all of the former
GM-Shreveport plant to Elio Motors; instead, the immovable property of the plant was
purchased by the Caddo Parish Industrial Development Board; and
WHEREAS, at the request of the Caddo Parish Industrial Development Board, a
parent company known as Industrial Realty Group first purchased the immovable property
of the former GM-Shreveport plant and immediately resold this same property to the Caddo
Parish Industrial Development Board; and
WHEREAS, the Caddo Parish Industrial Development Board then leased the
immovable property back to Industrial Realty Group; and
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WHEREAS, as the lessee and property manager of the former GM-Shreveport plant,
Industrial Realty Group next subleased a portion of the plant to Elio Motors; and
WHEREAS, Elio Motors assumed the plant as a sublessee during the latter part of
2013 and was expected to manufacture automobiles, stimulate economic growth, and create
approximately one thousand five hundred jobs by the end of 2015; and
WHEREAS, since 2013, Elio Motors has not engaged in automobile manufacturing
at the former GM-Shreveport plant, and as a result, related economic development and
stimulated growth in this state have not materialized as projected and desired; and
WHEREAS, at the time that Mr. Rasher extended the option for Mr. Elio to purchase
the GM-Shreveport plant and its assets, Mr. Elio was in substantial debt with a failing
engineering firm, was subject to substantial tax liens, and was in active search of
employment; and
WHEREAS, Mr. Stuart Lichter, CEO of Industrial Realty Group, who ultimately
gained control of the former GM-Shreveport plant, described and outlined the plant's worth
at an Elio Motors press conference on January 13, 2013; and
WHEREAS, Mr. Lichter said the GM-Shreveport plant "was probably the most
modern car plant in America", and further stated, "It's fully equipped and the amount of
money it saves in start-up costs, I can't even calculate, but it's something like five hundred
million dollars of equipment sitting in this plant, and you just turn it on!"; and
WHEREAS, in fact, less than a decade earlier, General Motors doubled the size of
the GM-Shreveport plant and invested almost two billion dollars in the process; and
WHEREAS, despite the substantial manufacturing potential of the GM-Shreveport
plant and all of the previous failures of Mr. Elio, Mr. Rasher and the RACER Trust first gave
Mr. Elio an exclusive option to buy the plant and all of its equipment; and
WHEREAS, despite the acknowledged manufacturing potential of the plant, Mr.
Rasher spoke to the members of the Caddo Parish Commission almost exclusively about the
salvage value of the GM-Shreveport plant, as opposed to its utilization for continued
manufacturing; and
WHEREAS, the parish administrator and former president of the Caddo Parish
Commission both publicly stated that Mr. Rasher's statement to them essentially provided
two options:
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(1) Cooperate with the Industrial Realty Group's and Elio Motors' occupancy and
use of the plant.
(2) Complete demolition of the plant.
WHEREAS, the option and threat of demolition was likely unwarranted based on the
stated value and potential of the plant; and
WHEREAS, the conduct of Mr. Rasher and other staff of the RACER Trust denied
the people of Caddo Parish and the state of Louisiana the opportunity for a reasonable and
appropriate due diligence process for determining how the former GM-Shreveport plant
would be used to replace the jobs lost by the plant's closure; and
WHEREAS, an industrial development board, created by the Louisiana Legislature,
was used to facilitate the current status of the plant; and
WHEREAS, certain aspects of the current lease agreement in place between the
Caddo Parish Industrial Development Board and the Industrial Realty Group could
potentially violate Article VII, Section 14(A) of the Constitution of Louisiana; and
WHEREAS, such provisions potentially in violation of the constitution may have
become effective as recently as November 2018; and
WHEREAS, Article VII, Section 14(A) of the Constitution of Louisiana describes
prohibited uses with respect to donations, loans, or pledges of public credit and provides in
pertinent part: "Except as otherwise provided by this constitution, the funds, credit, property,
or things of value of the state or of any political subdivision shall not be loaned, pledged, or
donated to or for any person, association, or corporation, public or private."; and
WHEREAS, it is a matter of state interest and concern that the prospect of the former
GM-Shreveport plant's demise may have actually been a false threat used as a catalyst to
urge the Caddo Parish Commission and other local and state economic development officials
to support and commit the former GM-Shreveport plant into the contractual care of
Industrial Realty Group and Elio Motors; and
WHEREAS, this matter of state interest and concern warrants further investigation
into the provisions of this state's industrial development board statutes provided in Chapters
7 and 8 of Title 51 of the Louisiana Revised Statutes of 1950 and Article VII, Section 14(A)
of the Constitution of Louisiana to determine the following:
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(1) The purpose and intended use of industrial development boards incorporated by
municipalities and parishes in the state of Louisiana.
(2) Whether powers thereof or the manners of use of such boards have potential to
create an unintended consequence of use of public property and resources contrary to the
best interests of the citizens of Louisiana.
(3) How the Caddo Parish Industrial Development Board may have been used to
create a contract contrary to the best use of the GM-Shreveport plant.
(4) Whether certain provisions of the current lease agreement for the GM-Shreveport
plant may result in a prohibited use of state property as described in Article VII, Section
14(A) of the Constitution of Louisiana.
WHEREAS, in light of the dire circumstances surrounding the former
GM-Shreveport plant, the state is compelled to examine the process of negotiations which
resulted in Industrial Realty Group's and Elio Motors' attainment of the former
GM-Shreveport plant, per the recommendation of the RACER Trust; and
WHEREAS, contingent upon the findings of the subcommittee, the Legislature of
Louisiana and the Department of Economic Development may be equipped with
indispensable, essential information for the creation of improved policy to better regulate
and safeguard with respect to negotiations expected to further the state's policy of protecting
the welfare and future prosperity of its citizens; and
WHEREAS, it is appropriate that the subcommittee examine any potential breach of
fiduciary duties or obligations which may have resulted in this state's lost opportunities for
substantial economic development; and
WHEREAS, the assets of the former GM-Shreveport plant possess great potential
to be a source of real opportunity for economic growth and job creation in Louisiana, but
although publicly owned, no provisions or mechanisms for local oversight are in place to
rectify this agreement made in furtherance of the state's economic development that has not
materialized to provide an economic benefit to this state; and
WHEREAS, House Rule 14.51 pertinently states the following: "Each standing
committee...each joint committee...and any subcommittee of such standing or joint
committee is hereby specifically and expressly granted the power and authority to hold
hearings, subpoena witnesses, administer oaths, require the production of books and records,
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and to do all other things necessary to accomplish the purposes of the study or investigation
assigned to it by the House or by the legislature or by a majority of the members of the
committee".
THEREFORE, BE IT RESOLVED that the House of Representatives of the
Legislature of Louisiana does hereby memorialize the United States Congress to take such
actions as are necessary to investigate the current condition of economic development in the
state of Louisiana relative to the RACER Trust's fulfillment of fiduciary duties concerning
the former GM-Shreveport plant and its operations.
BE IT FURTHER RESOLVED that a copy of this Resolution be transmitted to the
presiding officers of the Senate and the House of Representatives of the Congress of the
United States of America and to each member of the Louisiana congressional delegation.
SPEAKER OF THE HOUSE OF REPRESENTATIVES
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