Plant’s trickle-down makes abatement case
For The Record
Jefferson Energy made its annual trip to Orange County Commissioners’ Court Tuesday for a required status report on the county’s investment.
This time, instead of the usual thank-yous and check presentations, Mark Viator, the company’s director of public and government affairs, added a presentation on how tax abatements can create trickle-down spending to benefit the community.
Besides the $2.2 million in payments in lieu of taxes (PILOT) the company will make to the county in exchange for 10-year, 100-percent tax abatements on projects begun in 2014 and 2018, Viator introduced Paul Spence, CEO of STI Corp.
STI, Viator said, “is an Orange County company that has built most of our facility.”
Spence said Jefferson Energy has been his company’s No. 2 client since 2013, spending $268 million. He said STI had billed the chemical terminal on the Orange county side of the Port of Beaumont for 996,000 man hours of labor and employed as many as 400 people at a time at the plant.
Spence brought on three of his subcontractors from Orange County, Herbert Lutz, head of LNC Fabrication Group, and David Jones, owner of Gopher Industrial supply company, and Brad Rutledge, owner of Golden Triangle Industrial.
Lutz said STI had spent about $20 million with his company since the Jefferson Energy construction began.
“STI has been a blessing since the day I met Paul Spence,” Jones said. “They’ve bought supplies in advance of millions of dollars and the expansions we’ve been able to make [to the Gopher plant] along Highway 62 would not have been possible without them.
“I felt Orange County deserved a supply company like ours, but companies like STI and Jefferson need that infrastructure to keep those tax dollars here.”
Viator put up a chart showing Jefferson had spent more than $11.5 million in taxes to all Orange County entities in the five years from 2014 through 2018.
Entities in the western end of the county, where Jefferson Energy’s terminal is located, have received most of those taxes, with $8.5 million going to Vidor ISD, $827,000 to the Drainage District and $700,000 to Emergency Services District No. 1.
For 2018, Jefferson Energy paid county taxes of $136,000 and $112,500 in PILOT payments, with $12,500 going to the Orange County Economic Development Corporation.
Viator presented before the court Tuesday the $112,500 PILOT check, the $12,500 EDC administration fee, $385,000 in back taxes for old debts not presented for payment until 2018 and $3.88 million to County Tax Assessor-Collector Karen Fisher, to split between the eight different county entities Jefferson Energy’s plant sits in.
Stephen Lee, CEO of First Financial Bank, and Sheila Schoen of Vidor ISD also spoke to the benefits that came from abatements that attracted Jefferson Energy.
Jones, Rutledge and Lee all mentioned or alluded to Orange County being named a finalist for a $6 billion Chevron Phillips Chemical plant.
The company has already begun the first phases of negotiating tax breaks with the West Orange-Cove and Bridge City school districts and Orange city council and Orange County commissioners are expected to find incentives on their agendas in the next few weeks.
“I look at opportunities like Jefferson Energy, what they’ve already done and what they’re planning to do,” Lee, the banker, said.
“I can’t tell you how critically important it is to me, my customers and my local shareholders that we take every opportunity we can to attract businesses not only to come here but to continue to invest in this community.
“I think the commissioners have done a great job with the abatement policy and I urge you [commissioners] to use it aggressively to promote the growth of industry here.”
Commissioners Johnny Trahan, Theresa Beauchamp, John Gothia and Robert Viator, thanked Mark Viator (no relation to Robert) for making the presentation.
“Many people don’t have an opportunity to see that [trickle-down] effect,” Trahan said.
One who didn’t Tuesday was County Judge Dean Crooks, who was away at a state-required training class.
Crooks has generally been opposed to tax abatements, but Jessica Hill, executive director of the county’s EDC, said there was no connection between Crooks’ absence and the timing of Viator’s presentation.
The EDC and commissioners helped another current county business before the court’s day ended.
The awarded a six-year tax rebate deal for a $4 million relocation and expansion of Olson Engineering, which was recently named Business of the Year in Bridge City.
The expansion will create 36 permanent jobs and the rebate will be 100 percent for three years, 75 percent for year 4 and 50 and 25 percent for the next two.
Under a rebate, Olson will pay its full tax bill each year and get money back if it has met the agreed upon requirement for investment and job growth.