Nonprofit challenges deal shielding Greenfield from $200 million in local tax liability
12th December 2022 · 0 Comments
By Joshua Rosenberg
The Lens
An arrangement that would allow Greenfield, the company seeking to construct a large grain terminal in St. John the Baptist Parish, to avoid paying some $200 million in local taxes is a sham, a nonprofit group said in a letter addressed to the parish’s tax assessor on last Wednesday, asking him to treat the tract of land at issue as taxable property.
The cooperative endeavor agreement (CEA) that Greenfield entered into with the Port of South Louisiana in April is essentially a “simulation,” and does not constitute a bona-fide transfer of property under Louisiana’s civil code, William Most, an attorney representing the Descendants Project, said in a letter to Lucien Gauff, the parish’s assessor.
Greenfield retains “all the rights and indicia of ownership” of the property, and yet is still able to benefit from the port’s tax-exempt status — which the port has essentially rented out, Most wrote in the letter.
“The reality of the transaction is that Greenfield is paying the Port to rent its tax-exempt status,” Most wrote. “That is an arrangement not permitted by law. We bring this to your attention so that you can evaluate the appropriate and legal treatment of the property.”
Greenfield bought the tract of land at issue, which comprises some 1,100 acres, for $40 million in 2021. The company plans to build a large grain elevator on the property, worth more than $400 million, that would include 54 silos, a conveyor belt, railroad infrastructure and a dock. A study produced by the economic development agency Greater New Orleans, Inc., found that the grain elevator project would produce, among other things, 100 direct jobs.
The St. John Parish Sheriff’s Office, which acts as the parish’s tax collector, also signed the CEA. Under the agreement — known as a payment in lieu of taxes (PILOT) deal — Greenfield will transfer the land where it intends to build the grain elevator to the port, which is a public agency not subject to property taxes.
Instead of paying taxes based on the property’s assessment, Greenfield will send a $4 million one-time payment by the end of this year, followed by $2 million annual payments beginning in 2025 or when the grain elevator goes into operation, whichever comes first.
The agreement could cost St. John Parish more than $200 million over 30 years in ad valorem, or property, tax revenue, according to an analysis produced by the group Together Louisiana. The port would be set to collect almost $7 million in administrative fees over the course of the agreement.
“Greenfield received a tax incentive from the Port for the grain export facility which is projected to net well over $300 million in new revenue to help responsibly revitalize the West Bank economy and fund schools, roads, public safety and other vital services,” Cal Williams, Greenfield’s chief operating officer, told The Lens in a written statement.
Neither the port nor Gauff, the assessor, responded to individual requests for comment as of presstime.
Most, of Most & Associates, sent the letter on behalf of the Descendants Project, which is a nonprofit organization founded by twin sisters Jo and Joy Banner, that advocates on behalf of the descendants of people once enslaved in Louisiana’s River Parishes. The nonprofit, and the Banner sisters, are engaged in litigation opposing the grain elevator’s construction.
In his letter, Most did not directly threaten legal action against Gauff, but asked that he review the matter with his legal counsel, and also reminded him of his legal liability as the parish’s assessor.
One of the central elements that betrays the true nature of the CEA – that it fails to constitute a legitimate transfer of property – is that Greenfield maintains an expansive right of “redemption,” or the right to recoup the tract of land at issue, according to Most.
Greenfield maintains “a right of redemption to take the property back from the Port at the end of those thirty years, or anytime sooner that Greenfield wishes to take it back,” Most wrote in the letter. “Specifically, Greenfield can ask for the property back at any time.”
But right-of-redemption clauses in sale-leaseback arrangements – and indeed, sale-leaseback agreements themselves – are not uncommon, John Lovett, professor of law at Loyola University New Orleans, where he focuses his research and teaching on property law, told The Lens.
“A lot of these PILOT programs involve a sale and leaseback in order to take advantage of the reduction in property taxes,” Lovett said. “And the fact that there was a right of redemption, it’s not unusual – that’s specifically provided for in Louisiana Civil Code 2567.”
Lovett participated in a separate case in which he recommended the appropriateness of employing a sale-leaseback structure.
Yet, for his part, Most challenges the notion that the agreement even constitutes a bona-fide sale-leaseback agreement, according to the letter.
“The supposed sale of land has no price paid by the buyer at all,” Most said. “Instead, the purported seller is paying the purported buyer $4 million upfront to take the land.”
“Unlike a typical lease, the Port cannot evict its tenant even if Greenfield stops paying rent. In the event that Greenfield stops paying, the Port cannot take possession of its property – it has to give the property to Greenfield,” Most wrote in the letter.
And for Jo Banner, one of the primary concerns is how to hold the port, which is an unelected body, accountable.
“We create these powerful entities that have no control measures,” she said. “There’s nothing to check them – and it’s intentional.”
Clay pit contract
Meanwhile, Greenfield has entered into a clay excavating contract worth some $24 million to the company that would, if executed, supply material to the Army Corps’ of Engineers West Shore Lake Pontchartrain levee project – even as the Corps is already engaged in a review of the grain elevator project, per Section 106 of the National Historic Preservation Act.
The Corps received a permit application from Greenfield in October for the clay excavation project, from which Greenfield intends to provide clay for the Corps’ $1.2 billion levee project — which is meant to protect the river’s east bank communities from flooding — a spokesman for the Corps previously told The Lens. But the Corps is not in a position to evaluate the borrow pit project, a spokesman said at the time, because of the potential “overlap” between the two projects.
The contract that Greenfield entered into on Oct. 3 with local firm, D Hayes Enterprise LLC, provided that D Hayes would excavate and remove over 8.6 million cubic yards of clay from the tract of land on which Greenfield plans to construct its grain elevator. D Hayes would pay Greenfield $2 for each ton excavated and removed, which would amount to approximately $24 million.
The St. John Parish Council was planning to vote to permit the 214 acre clay pit during its Nov. 22 meeting, but later changed those plans, and removed the item from its agenda after an attorney representing the Banner sisters, Lisa Jordan of the Tulane Environmental Law Clinic, contacted the council to learn more about the measure.
For Most, the episode supplies further evidence that Greenfield is the de facto owner of the land.
“The clay pit project confirms that Greenfield is the owner of the land, because Greenfield is listed there as ‘property owner,” Most said in a statement he provided to The Lens, citing the permit application filed with the parish.
Editorial note: David Lanser, an attorney at Most & Associates, is the partner of Marta Jewson, The Lens’ interim editor.
This article originally published in the December 12, 2022 print edition of The Louisiana Weekly newspaper.
