Louisiana commerce board approves tax exemption for Folger despite allegation that company used tax loophole

Coffee giant could avoid $12 million in back taxes to New Orleans

Members of Together Louisiana gather outside the Lasalle Building at 617 North 3rd Street, to draw attention to the Board of Commerce and Industry to protest the tax exemptions the group describes as "corporate welfare." (Photo courtesy Broderick Bagert)

The Louisiana Board of Commerce and Industry on Friday approved $220 million of single-year industrial tax exemptions, including 13 exemptions for Folger Coffee Company that  might allow the coffee giant to avoid paying as much as $12 million in back taxes to New Orleans. 

Board members approved nearly $4 million in first-year tax breaks for Folger under the state’s Industrial Tax Exemption Program for projects completed at Folger’s two plants in New Orleans East. Some of those exemptions are for plant additions completed in 2018. The company has not paid property taxes on those upgrades for the last two years.

In order for Folger to get the tax exemptions, its application will next have to be approved by New Orleans elected officials. At least one member of the New Orleans City Council has already accused the company of not paying its fair share of taxes.

Folger is the coffee division of the publicly-traded J. M. Smucker Company.

At Friday’s meeting, the nonprofit Together Louisiana, which has vehemently opposed corporate tax breaks because they divert money from public education and other community services, asked the board members to deny Folger’s application, arguing the company skirted nearly $12 million in property taxes by having its ITEP application delayed. 

Together Louisiana’s attorney Joel Waltzer argued that the plant’s additions should have been on the tax rolls for Orleans Parish once they were built.

The company filed an advance notice with Louisiana Economic Development when it began its plant additions in 2017, and once completed in 2018, Folger submitted its application to receive the exemption, but the application was incomplete. 

Louisiana Economic Development asked the company for additional information two weeks later, but Folger did not respond to that request until February 2020, Waltzer said.

The delayed response put off a vote on Folger’s application by the commerce board, which in turn kept the plant’s additions off the city’s tax rolls. Furthermore, after Louisiana Economic Development processed Folger’s completed application, the company sent the agency an email asking them to delay any action by the board, Together Louisiana’s Broderick Bagert said. 

In October, reporters with WVUE-TV asked the economic development agency why Folger requested the delay, but the department responded, “The company is not required to provide a reason for its request to defer.”

At Friday’s meeting, Folger consultant Jimmy Leonard said the company requested the delay simply because it wanted the board to consider the application along with the company’s other newer applications at the same time. Leonard also presented a letter to the board from Orleans Parish Tax Assessor Erroll Williams describing Folger as a good taxpayer that has been transparent with him throughout the process. 

Together Louisiana members were armed with a letter of their own — from New Orleans Councilwoman Helena Moreno — that painted a different picture.

“A recent investigation by journalist Lee Zurik on WVUE-TV brought this matter to the public’s attention in August, due to the alarming length of time of not paying millions of dollars of taxes and now seeking a loophole to get a pass,” Moreno wrote in the Oct. 26 letter. “The total owed could be as high as $12 million…We cannot afford for a large corporation to not pay its fair share when our residents and small business owners are being asked to sacrifice so much.”

The board, nevertheless, approved Folger’s application because it was up to the tax assessor to place the property on the tax rolls, which he never did, Board Chairman Jerald Jones said. 

In June 2016, via executive order, Gov. John Bel Edwards gave parish governing bodies authority to approve or disapprove property tax exemptions that affect their bottom line under the Industrial Tax Exemption Program. The commerce board Friday approved other first-year exemptions worth $165 million from companies that filed advance notice prior to June 24, 2016 — meaning they fall under the old rules that do not require approval from local elected officials. Those approvals included nearly $100 million in first-year exemptions for Cameron LNG, a subsidiary of California-based Sempra Energy.

Together Louisiana successfully convinced the board to defer $43 million in tax exemptions for Marathon Petroleum, alleging the company falsified public records to avoid going to St. John the Baptist Parish officials for approval.

The board also denied appeals from other companies that had applications rejected by parish officials, including a $3 million first-year exemption for Praxair’s chemical manufacturing plant in St. James Parish.

“Every single one of the projects they rejected went forward with construction as planned,” Bagert said, pointing out that ITEP is not actually providing its claimed incentives of attracting jobs.

Bagert said he feels the board is making slow progress toward no longer “rubber stamping” ITEP applications but said the change has only come after immense public pressure.

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