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11.5.23

Port fends off bill to clip its override power

Having potentially grifted future Bossier City water customers, the Port of Caddo-Bossier might start putting things people don’t want next to their backyards – with local governments powerless to stop that.

The now-notorious Oct. 17, 2022 meeting of the Port Commission produced Resolution #19 that enticed Bossier City to give it enough money to build a water distribution facility. If the city in future years decides to use even one drop from that, city ratepayers will be on the hook for as much as an estimated $62 million with no asset in return.

But another vote taken then may lead to an even more profound impact on the entirety of Bossier Parish, and Caddo as well. Resolution #20 ratified a complicated arrangement that will deprive some local government entities of tax dollars they otherwise would collect as well as points to the possibility that decisions like this could override local land use regulations.

In 2021, the Legislature passed Act 152 that broadened the powers of the Port, in two ways. First, it granted the Port general economic development powers, including tax abatement under which payment-in-lieu-of-taxes (PILOT) qualifies. PILOT arrangements allow for a government to waive normal property tax assessments in favor of another payment regime. This can act as an incentive to attract development, which presumably spins off other tax revenues, by reducing property tax costs for a period.

The Port is a taxing entity over that which is defined as its “port area,’ fixed in law at its conception to include all of Caddo and Bossier Parishes. Last fall, it decided to offer a PILOT to Rocking R Solar LLC, a Delaware entity that the previous month received Louisiana Public Service Commission approval to provide electricity on 72.5 acres near Hosston in north Caddo Parish. That is a subsidiary of the builder D.E. Shaw Renewable Investments, which will sell the power to Southwestern Electric Power Company, the provider for northwest Louisiana.

The facility should have a capacity of 200 megawatts, but more panels could be in store regionally. SWEPCO joined itself to the hip with its affiliate in Oklahoma that received its state’s approval for the deal, but depending on what Arkansas and Texas regulators do, another 464 MW could be added in northwest Louisiana, which very well could occur in the same manner as the Port has revealed it has leased a thousand acres total from which the facility will be carved out. With SWEPCO promising to shutter several hundred megawatts of coal- and gas-powered capacity over the next several years and brazenly pledging to replace that with more expensive (and less reliable) renewable sources, the company may be on the prowl for more land in Caddo and Bossier parishes.

And, with the Port’s help, it can do so with impunity. Act 152 also inserted the phrase “It [the Port] shall not be subject in any respect to the authority, control, or supervision of any local regulatory body or any political subdivision” in the port area. In essence, not only can it negotiate a PILOT without interference from other local governments that would affect their collections, but also if it becomes a lessor of land, it can override any land use controls.

The deal with Rocking R demonstrates how. It transfers assets on the land to the Port, which then leases back those to the firm and forgives property taxes for the first ten years, then ramps up to full value over the next ten. Essentially, it trades firm ownership of the assets for taxes forgone by the Port – an arrangement similar to that with Bossier City, which traded the value of the bonds to pay for the water facility for an uncertain chance to make at least $31 million from use of the water to offset its obligation and keeping anything past that free and clear.

The taxes in question are those from the value added by the equipment, and potentially would be collected by several entities. In the debate over its resolution, the Port pledged to gain assent from Caddo Parish, the Caddo Parish Sheriff’s Office, and Caddo Parish School Board to go forward with the deal, each of which would receive a cut from the second decade of equipment property taxes collected in proportion to their millages – but excluding Caddo Parish Fire District 8 which services the property, which would not enjoy the extra revenues.

Importantly, the power deal actually was negotiated early in 2022, well before the PILOT came to fruition. Perhaps an enticement to Rocking R was the informal promise of a PILOT that SWEPCO threw in, but it could not guarantee this, nor could the LPSC when it gave approval. Only the Port whispering behind the scenes that it would do it after its leasing could have happened, but the PILOT itself could not have made the difference whether Rocking R initially went for the deal because it could not be offered formally.

As a result, Republican state Rep. Danny McCormick, whose district comprises rural north Caddo and Bossier Parishes, filed HB 201 which would not allow a PILOT for District 8 and well as District 7, as well as remove the port area override of local control that only had been inserted two years prior. Through two committee hearings, bill backers, from the Port, Ports Association of Louisiana, and Rocking R, kept trying to steer the debate towards the PILOT.

In fact, the Port sought to buy off District 8 complaints, first with Rocking R offering to the district a one-time payment of $25,000 (McCormick said it was only $5,000), then $300,000 – even as testimony revealed if normal taxation occurred on the equipment it could expect much more over the period of the PILOT. Supporters replied that without the PILOT they didn’t think the deal would go through, basically saying the district should be happy to get anything from the sufferance of the Port.

(Supporters also tried to muddy the issue by erroneously claiming no extra service burdens would be placed upon the fire district for the extra cash, since they alleged no fires around large collections of solar panels ever had happened in America. That’s false, and likely the amount of a dozen or so annually is underreported.)

Again, SWEPCO and Rocking R struck the deal over two years ago without any PILOT assurance, and the LPSC gave its assent prior to that as well. That and that the firm would throw in hundreds of thousands of extra dollars undermines the contention that without the PILOT the deal would collapse. And, supporters – much as what happened during vetting of the Bossier City water deal when they kept sidestepping that the city could not exit the agreement at any time without owing anything while trying to create the impression that it could, in direct contradiction with the actual wording in the document – kept steering away debate from questions about the Port’s ability to ignore local government restrictions on its activities.

That override authority, which all port authorities in the state share, seems settled in state jurisprudence, as supporters noted in testimony, although it’s unclear whether leased property counts the same as that owned. Somewhat of a check does exist on these running rampant over, for example, local zoning in that ports’ appointees to their governing boards come from local governments, but only from the largest. Still, with their fixed terms appointees could cross up the wishes of the local governments that appointed them, or majorities appointed by other jurisdictions could outvote them (as actually happened with the one of the two Caddo Parish commissioners who voted against the resolution, who might be expected to listen most closely to smaller jurisdictions’ desires) to allow a port to impose its will on a local government the latter otherwise would regulate.

This won’t change, at least this year. McCormick sensed he couldn’t grab a majority for the bill and deferred it in committee. And it leaves area citizens very much at the mercy the Port, over which they have no direct control and only once every quarter-century get to vote on the property tax millage (currently 2.51) they pay.

For example, even as Bossier Parish currently has a moratorium in place through the start of September on solar panel siting, nothing could stop the Port from plunking down on its land in the unincorporated parish – even if not owned but only leased – any many panels as it can even if next to residences. While it hasn’t to date just as it chose to cut major Caddo governments in on future PILOT receipts, the fact remains it could do as it pleases under current law despite the Police Jury’s dictum.

That’s something lawmakers should revisit, and not just with Caddo-Bossier but for all port authorities. Meanwhile, the Port remains on the prowl, sitting on $45 million in liquid assets, four-fifths unrestricted in use raking in $7 million annually from property owners, looking to strike more deals with powers that on the whole can put its own interests ahead of those of Bossier and Caddo residents.

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