Folgers tax-break saga ends with rejection by New Orleans City Council

The New Orleans City Council rejected all of the Folgers Coffee Company’s property tax exemption applications in a final decision on Thursday, giving the city an estimated $14 million in revenue over the next 10 years.

The council voted unanimously to reject the four applications sought by the coffee giant for its facilities in New Orleans East, pointing out that the applications failed to meet the city’s standards for corporate tax exemptions and that the city is financially stretched due to the COVID-19 pandemic.

“Folgers did not do anything wrong,” Councilmember Cyndi Nguyen said, adding that she was only voting to reject the applications because the city needs the money and because the applications didn’t meet the city’s standards, which are stricter than the state’s. 

The decision marks the end of a lengthy saga that prompted many New Orleans residents to speak out against the so-called “corporate welfare” that is Louisiana’s Industrial Tax Exemption Program (ITEP). The program offers some of the most generous corporate incentives in the nation by offering businesses 80 percent exemptions on property taxes for periods up to 10 years. Opponents such as Together Louisiana say ITEP has starved Louisiana’s public schools for decades.

The Folgers applications, six in total, have been on the city council’s agenda since Nov. 17. However, the Louisiana Board of Commerce and Industry had approved the applications just a few days before the November meeting, prompting the council to defer the matter for 30 days. Then just minutes before the council was to vote on them in December, Nguyen requested a second 30-day deferral after a calculation error was revealed, prompting further debate.

Dozens of public comments were read aloud at the December meeting. Most of them vehemently opposed the tax breaks, but Folgers enlisted help from its own staff who submitted comments in support of the company.

As a compromise at that meeting, the council rejected two of the applications and deferred the remaining four until January. 

Thursday’s meeting attracted the same level of public attention from both sides, but after Nguyen, who represents District E (New Orleans East), gave a speech about why she was voting against the tax breaks, the council seemed firmly in agreement.

None of the six applications met the city’s criteria, which requires the creation of 15 jobs per application with each job paying a minimum hourly wage of $18. Also, some of the applications were for facilities that Folgers had already built — prompting Councilmember Helena Moreno to call the proposed exemptions a “gift” rather than an economic incentive.

In total, the six applications are worth an estimated $25 million in property tax revenue over 10 years for City Hall, the Orleans Parish School Board, and the Orleans Parish Sheriff’s Office. Each of those entities is allowed to vote on the applications for its share of the revenue, thanks to new rules enacted in 2016 by Gov. John Bel Edwards.

The Orleans Parish School Board rejected Folgers’ applications last month, and the sheriff’s office has not yet decided.

Folgers is the coffee division of the J.M. Smucker Company, a publicly-traded corporation that ranked as No. 407 in the 2020 list of Fortune 500 companies.