Daily Report

This Afternoon's Headlines / Tue, April 15, 2014

Capitol Views: Bill to reduce government contracts by 10% lives to die another day

In what could be a modern-day record in legislative futility, a contract reduction bill championed by Treasurer John Kennedy was approved by the House Appropriations Committee today for the fifth year in a row. If history repeats itself, HB 142 by Rep. Dee Richard, No Party-Thibodaux, will pass the House but die in the Senate Finance Committee. But today was Richard's and Kennedy's opportunity to explain their plan to require all departments and agencies to reduce their contracts by 10%, with the savings—estimated at from $300 million to $500 million annually—to be dedicated to higher education. Opposing the bill, Commissioner of Administration Kristy Nichols explained that the administration had gone from 6,300 contracts in fiscal year 2008 to 2,400 as of March 25, at a savings of $1 billion. "We're already doing the work the treasurer said we ought to be doing," she told the committee. "The administration saved $1 billion?" asked an incredulous Richard. "Where did that money go?" With no objection, Richard's bill now heads to the House floor.

—With the use of drones rapidly increasing, the Legislature is working on prohibiting their being deployed to spy on individuals and private property. Sen. Dan Claitor, R-Baton Rouge, calls his SB 330 a "work in progress" in his effort to attach criminal fines "for putting a drone in your backyard without your permission." It passed the Senate Judiciary A Committee, following a similar measure by Rep. Bodi White, R-Central, that has cleared the Senate. "Just because you can do it with technology doesn't mean it is right or you should," Claitor said. The panel worked through the bill's list of exceptions, which included use by the military, satellite mapping, utility and pipeline monitoring, use over public property, and catastrophe response. Senators also OK'd using drones instead of helicopters in movie production to capture cityscapes. The only objections were raised by Cassie Hughes of the Louisiana Press Association, who was concerned the bill would make off limits news gathering photography currently done by helicopters. Claitor remained concerned about the potential for illegal searches. "The First Amendment does not trump the Fourth Amendment," he said. Committee members asked the two to try to work out differences through floor amendments and then approved Claitor's bill without objection.

(John Maginnis and Jeremy Alford will publish Capitol Views each afternoon on Daily Report PM through the end of the legislative session. The report is also available to subscribers at LaPolitics.com. Registration is available on the homepage.)

Louisiana Public Broadcasting is providing a daily video update featuring highlights of the session, which you can see beginning at 6 p.m. here.

Road to connect The Grove, Interstate 10 service road gets green light

Developer Richard Carmouche has secured preliminary approval from the Federal Highway Administration to build a road that will connect his mixed-use development, The Grove, to the Interstate 10 service road that runs between Bluebonnet Boulevard and Siegen Lane. "That is very important, ultimately," says Carmouche. "It's not so important with what we are doing in phase one because we haven't built a lot of product yet, but it will be very important for future retail development." The Grove is located on 118 acres behind the Mall of Louisiana and currently has one completed apartment building consisting of 190 units, with plans for a second building of 160 units, 850 residential units and 775,000 square feet of office and retail space. For now, the only access to the development is via Mall of Louisiana Boulevard. The new road, which is still more than a year from completion, will enable motorists to turn directly off I-10 East at the Mall of Louisiana exit, just past Bluebonnet. They will also be able to exit the development from that road, continuing to Siegen Lane. "This is the first intersection of its kind in the state," Carmouche says. "It's not our main entrance but it is very important because it bypasses the mall and gives our people another way out instead of funneling all our traffic into that one intersection." Though Carmouche has secured federal approval for his plan—as well as state and local permission—he does not yet have a permit to begin construction. Getting one is still months away and will require as much as $6 million in additional engineering work and infrastructure improvements, he says. —Stephanie Riegel

Granite fabrication company to build new facility off O'Neal Lane

Menzie Manufacturing, a granite fabrication company owned by the family who owns ProSource Wholesale Flooring of Baton Rouge, is building a new fabrication shop and showroom on a 6-acre tract at 16575 Commercial Ave., off of O'Neal Lane near Interstate 12, says Chief Operating Officer Ryan Kennedy. The fabrication shop—the workspace where stone is cut and polished into countertops—and showroom will be approximately 11,800 square feet, according to a plan review application recently filed with the city-parish Department of Public Works, and will cost $800,000 to build. Menzie's current facility—located at 11145 Darryl Drive, off of Sherwood Forest Drive near South Choctaw Drive—is approximately 10,000 square feet. Kennedy says the relocation will not only move the company to a more convenient and prominent location, but will also give Menzie the ability to upgrade equipment and store a larger supply of materials. In addition to building the new shop and showroom, which Kennedy says he expects the company to move into by the end of the year, Menzie will utilize an existing warehouse on the property for storing slabs and will also build a second bigger warehouse to store floor-covering materials. The second warehouse will begin construction in the fall with a projected completion date of early 2015, Kennedy says. ProSource Wholesale Flooring, the Kennedys' other business, ranked 90 on Business Report's 2013 Top 100 private companies list. It is part of a 156-store chain with locations across the U.S. and Canada. —Rachel Alexander

Dairy Queen planned next to Juban Crossing

Plans are underway for a new Dairy Queen restaurant that will be located across the street from Juban Crossing. Gretna businessman Pete Vicari, who owns several DQ franchise outlets in southeast Louisiana—including the one on Sherwood Forest Boulevard that opened in 2012—has a purchase option on a nearly 1-acre vacant tract directly across from the planned mixed-use development, according to his broker, Mark Hebert. The deal is expected to close in the next three months, and construction will begin immediately, Hebert says. When completed, the new DQ—one of only a handful in this market—will be the first quick-serve restaurant in the Juban Crossing area. It won't be the last, though, according to Doug Ferris, who represents Juban Development Co., which is selling the 38,500-square-foot tract. Now that construction has finally begun on Juban Crossing, Ferris says interest from retailers and restaurant chains has picked up considerably. "The interest has been overwhelming," Ferris says. "I foresee a lot of new things coming." Earlier this month, Juban Crossing developer Creekstone Companies announced several new tenants planning to open later this year in the first phase, including a dine-in movie theater. —Stephanie Riegel

Cook: Several offers rejected before Citiplace III sold for $7,825,000

Several offers were made on the 43,000-square-foot Citiplace III building at 6100 Corporate Blvd. before the owner—6100 Associates LLC, represented by developer Tommy Spinosa—decided to accept an offer of $7,825,000 from Wolf, Et Al, LC, whose registered agent is Charles Bondy and officers are Price Jr., Clifton and Brent LeBlanc. "Good quality buildings with constant income streams are difficult to locate in this market," says Ty Gose of NAI/Latter & Blum, who brokered the deal. "This was a good quality building with good quality tenants." The building was completed in 2002, and its tenants include BancorpSouth, which leases approximately 20,000 square feet, and the local offices of the Federal Housing Administration. Sources close to the transaction indicate that rental rates range from about $21 to $28 per square foot, and the building was nearly 67% occupied at the time of sale. The new owners intend to continue to lease the building and have included it in their growing real estate portfolio of income-producing properties. The sale price works out to about $182 per square foot.

(Appraiser Tom Cook owns Cook Moore and Associates. Reach him at 293-7006 or TCook@cookmoore.com.)

Andrews: Reforms may be on the way for the mortgage interest deduction

Happy Tax Day. And happy birthday to my 85-year-old father, who has shared this day with the IRS since they officially designated April 15 as Tax Day in 1955. I know we've all been preparing for this day over the past few days, weeks and months (for Tax Day, that is—sorry, Dad); calculating our various deductions, searching for receipts and wishing we had started earlier. Reforming one of those deductions—the mortgage interest deduction—is once again being discussed. U.S. Rep. Dave Camp, a Republican from Michigan and outgoing chairman of the House Ways and Means Committee, has proposed sweeping changes to the tax code, including a reduction in the mortgage interest deduction based on the amount of indebtedness one has when securing a home. Current tax law allows a taxpayer to deduct interest payments on up to $1 million in qualified indebtedness. According to Camp's discussion draft: "a taxpayer may continue to claim an itemized deduction for interest on acquisition indebtedness, but the $1 million limitation would be reduced to $500,000 in four annual increments, so that the limitation would be $875,000 for debt incurred in 2015, $750,000 for debt incurred in 2016, $625,000 for debt incurred in 2017, and $500,000 for debt incurred thereafter." This proposed change—which most observers say has no chance of passing this year, but makes for interesting discussions about the future—would not impact most of us since the average mortgage balance is far below even the $500,000 level and would therefore not negatively impact the affordable and moderately-priced housing sectors. But we can expect some discussion of the issue later this year, likely after the November elections, when Congress again tries to figure out ways to balance an out-of-whack budget. And we can probably anticipate who will be the primary target of tax reform. To quote Alvin Lee, the late, great lead guitar player of Ten Years After: "Tax the rich, feed the poor / till there are no rich no more." Rock on.

(Brian Andrews is assistant director of the Real Estate Research Institute at LSU's E.J. Ourso College of Business. His business is Andrews Commercial Real Estate Services, and he can be reached at brian.andrews@acresllc.com.)

La. small business tax climate ranked 21st best in the nation

When it comes to the tax system they must negotiate, Louisiana is the 21st best state in the nation for entrepreneurs and small businesses. So says the Small Business & Entrepreneurship Council, a Washington, D.C.-based nonprofit advocacy and research organization, in its "Small Business Tax Index 2014: Best to Worst State Tax Systems for Entrepreneurship and Small Business" report, released today. The council says this year's edition of the annual index and state rankings was compiled by analyzing 21 different tax measures. Each state is ranked in each category, as well as overall, based on a score taken from all 21 categories. Louisiana's overall tax score decreased in the new report to 41.56, down from 41.66 in the 2013. But the state nonetheless slipped five spots in the overall ranking, down from 16th a year ago. Nevada, the top ranked state in this year's index, has an overall score of 9.67; while California, at 82.69, is ranked last. Louisiana's overall score has grown from 34.67 in the 2012 report, when it was also ranked 21st. You can access the full report and see Louisiana's rankings in each tax category in the full story. —Staff report

News roundup: EBR sales tax collections up 6.4% in February … Bill would let La. drivers choose if they want REAL ID … Senators back state management of carbon emissions in La.

In the bank: Sales tax collections in East Baton Rouge Parish, including those collected on vehicle sales, were up 6.4% in February, compared to the same month a year ago. The latest monthly report from the city-parish Finance Department, released today, shows collections were up both inside and outside the city limits of Baton Rouge. A total of $13.9 million was collected in February, compared to $13.1 million a year ago. See the complete report, which includes year-to-date statistics.

At the wheel: Louisiana driver's licenses could move in line with a federal identification law, under a proposal that won the backing of the House Transportation Committee today. The Associated Press reports the bill is designed to keep state residents from running into domestic flying difficulties by 2016, if licenses aren't deemed compliant with the REAL ID law. The committee supported without objection today a bill that would allow people to choose whether they want a REAL ID-compliant driver's license or a noncompliant license. The bill now heads to the full House for debate.

Beyond the horizon: Louisiana could have its own, less stringent plan for implementing the Environmental Protection Agency's limits on carbon dioxide emissions, under a proposal advancing in the Legislature. The Associated Press reports the Senate Environmental Quality Committee approved today a proposal by its chairman, Sen. Mike Walsworth, to let the state Department of Environmental Quality decide how to apply EPA's upcoming rule on carbon dioxide emissions. The EPA plans to release new regulations in June to curb carbon dioxide emissions from power plants, an effort to fight climate change. The proposal moves next to the Senate floor.
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