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Local News

June 18, 2014

Zeo, PA City Council at stalemate over tax abatement

PORT ARTHUR — Port Arthur City Council and developers of a proposed $1.2 billion greenfield plant have at least for now reached a stalemate, with neither party ready to budge on certain terms of a requested tax abatement.

City Council met Tuesday in closed session to further discuss Zeo Gas’s request for a  10-year, 100 percent abatement. Council had discussed the matter a week prior, after the company’ CEO made a presentation, but declined to act on the request.

After Tuesday’s closed door session, Council’s position had not changed, Bob Williamson, District 6 City Councilman, said.

“The consensus is Zeo’s terms are not acceptable to the Council. They are unbending on the issues and won’t negotiate,” Williamson said.

The sticking point is the 100 percent tax abatement on new value created from the project for 10 years, which is the offer Jefferson County Commissioners Court has made in an effort to entice get the company to build locally.

Williamson said the city is not opposed to further negotiations, but is not willing to do the same deal as the county.

Tim Belton, CEO and founder of ZeoGas, said the company will settle for nothing less than the same deal offered by the County.

Among the reasons Council has declined to pony up the same deal is that the city is in the process of developing a tax abatement policy — one that will serve as a pattern for all industry.

“It will create a level playing field for all developers who want to do business in Port Arthur,” Williamson said.

City Council is also reluctant to do the 100 percent, 10-year deal because the company’s projections are based on best-case-scenerio, Williamson said.

“Our experience is we know we don’t rely on those numbers. It is unfortunate that is all we have for the public to consume, but we don’t expect anything near that,” Williamson said.

At last week’s meeting, Councilmembers said they were opposed to the abatement request because residents had made it known they were not in favor of granting 100 percent abatements.

City Council’s initial offer provided for a 10-year agreement with a 75 percent tax abatement during construction years. Once operational, the plant would be eligible for a 90 percent abatement that would decrease to 50 percent over the course of the 10 years.

Zeo would also be eligible to receive additional incentives tied to employing local residents and using local contractors, Deborah Echols, Port Arthur finance director, said.

Belton said last week the company was concerned that city’s workforce would have to be trained to meet the skillset needed for the project that is expected to bring 300-600 jobs upon completion. During the construction phase about 3,000 people would be employed.

During the construction phase, which would last about two years, about $2.2 billion in economic dollars would be generated into the local economy. Another $2.5 million in sales tax revenue and $9,680 in permit fees would also be realized, he said.

A water contract could earn the City $5 million annually, with potential expansion reaching $15 million.

In exchange for the 100 percent abatement, Belton pledged last week that ZeoGas would extend its best effort to hire 25 percent Port Arthur residents. To achieve that goal, Zeo would have a job fair during its groundbreaking ceremony, would work with the school districts and award college scholarships to train Port Arthur citizens.

In an e-mail dated June 13, and obtained by The News, Zeo offered to intensify efforts to hire locally, and use local contractors.

Williamson said those efforts were not enough, not unless the company was willing to commit in writing.

“Without some guarantee that Port Arthur people will get those jobs, we are just at their mercy. We would have given away all we had and just be at their mercy,” Williamson said.

Williamson said the city would be required to provide services for the 10-year period it was not collecting taxes, and that the cost would rise by inflationary standards by about 25 percent.

Belton said the company is actively pursuing other sites, including Corpus Christi and Louisiana.

“ PA will not be the priority site if the city does not match the county’s offer,” Belton said Wednesday in a telephone conversation.

Williamson said the city will continue to entertain any other offers from Zeo.

E-mail: skoonce@panews.com

Twitter: skooncePANews

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