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Local News

June 10, 2014

PACC nixes long-term abatement to $1.2 billion development

PORT ARTHUR — It was the county’s way, or the highway for representatives of ZeoGas — an upstart business that wants to locate in Port Arthur as long as the city offers a 10-year, 100 percent tax abatement deal.

Jefferson County has already made that offer, and the company would consider nothing less, Timothy D. Belton, president and CEO of ZeoGas told Port Arthur City Council members Tuesday.

Belton detailed how the company is looking at sites in Louisiana and Corpus Christi to build its $1.2 billion greenfield plant.

The company would convert clean natural gas into sulfur-free, low benzene gasoline.

Both Louisiana and Corpus Christi have indicated a willingness to meet Zeo’s terms, Belton said.

Port Arthur has not.

After meeting in executive session Tuesday, City Council declined to strike the deal. Rather, City Council re-extended an initial offer providing 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.

“We have not closed the door,” Bob Williamson, District 6 City Councilman, said. “We left everything we offered, still offered. We have encouraged Zeo to take a second look at it.”

In a telephone conversation after the meeting, Belton said he was surprised at the city’s reluctance and was reassessing where the company will build.

“We are already actively looking at other sites from the moment we walked out of  Council chambers,” Belton said. “At this point we will listen to their proposal as well as anybody’s else’s, but it is now more critical that it be competitive.”

Earlier in the meeting, Belton said Port Arthur’s location combined with existing infrastructure made the site attractive.

An insufficient workforce did not.

Belton said the 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.

In exchange for the 100 percent abatement, Belton pledged 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.

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.

Jefferson County Judge Jeff Branick urged Port Arthur City Council to consider the same deal the county offered.

“In a perfect world there is no reason for government to incentivize an industrial development project, but we do not live in a perfect world,” Branick said.

In Louisiana the process is simple, all it takes to be granted a 10-year, 100 percent abatement is to walk in an fill out a form, Branick said.

“We live in a world where we are in competition with other cities,” Branick said.

In granting tax abatements, cities should look at long-term tax rolls, he said, adding that the county had benefited from other 10-year abatements entered into.

“What it boils down to is whether you want this project,” Branick said.

Williamson said Port Arthur residents had made it known they were not for 100 percent abatements, and the Council had a responsibility to honor resident’s wishes.

“They made their feeling known at community meetings, wrote letters to the editor, spoke to me personally; the Council has no doubt of what the community wants and we are trying to fulfill that mandate.

Port Arthur is also a different economic model than the county, and collects a higher rate of property tax dollars.

“When you are talking about incentives, if they want us to match the county  dollar for dollar we will do that right away, but when talking about the same piece of a much bigger pie, we are not so ready to get on board,” Williamson said.

Belton said Zeo company officials first met with Port Arthur officials in December, but early on reached a roadblock when their efforts to arrange subsequent meetings were not met. It was not until June that the company received an abatement offer from Port Arthur.

Belton said his company would be looking at other cities that recruit businesses like Zeo, rather than making it as difficult as they can.

“I actually cannot find a rational explantation to their (City Council’s) behavior,” Belton said.

E-mail: skoonce@panews.com

Twitter: skooncePANews

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