Daily Report

This Morning's Headlines / Wed, August 20, 2014

'Business Report': Is La.'s billion-dollar investment in film an economic boon or fiscal drain?

In 2002, Louisiana enacted a relatively modest Motion Picture Investor Tax Credit Program. Since then, lawmakers have expanded the program into arguably the most generous in the country. As Business Report details in its new cover story, the incentive program has made film and television a nearly billion-dollar industry in the state. Without question, the program has been wildly successful in attracting movie productions. In 2013, Louisiana hosted more major studio feature films than any other state, including California. Overall, Louisiana is competing with Georgia to be the No. 3 state in film production behind California and New York. Film incentives are doled out as tax credits; they're not really "tax breaks." Films typically are produced by single-serving limited liability corporations with out-of-state owners that don't have Louisiana tax liability. Producers can sell the credits on the open market or back to the state at 85% of face value. "It's not an investment," says Greg Albrecht, the Louisiana Legislature's chief economist. "It's a subsidy." How much of a subsidy? That depends on which number you want to look at. According to a report commissioned by Louisiana Economic Development, about $241 million worth of tax credits was certified in 2012. By Albrecht's count, based on Department of Revenue figures, more than $1 billion worth of credits were claimed between fiscal year 2006 and 2013. The movie business in turn has spent plenty of money in the state—more than $717 million in 2012 alone. And yet, Louisiana—like other states with similar programs—has found that film tax credits are a net negative for the state's fiscal picture. The state treasury lost $168.2 million on the program in 2012, LED says. "Next year's legislative session is another chance to eliminate, slash or reform the program," writes David Jacobs in the new cover story. "While sizable cuts could save money at the risk of chasing the industry away, the right tweaks just might improve the state's return on investment without compromising Louisiana's chance to make 'Hollywood South' a permanent reality." Read the complete cover story. Also, be sure to check out sidebar stories on Louisiana's return on its investment in film and efforts to fight fraud in the state's film tax credit program. Send your comments to editors@businessreport.com.

Today's poll question: The state's treasury is losing money on Louisiana's Motion Picture Investor Tax Credit Program, but the overall economy benefits. Given all the ways your tax dollars could be spent, do you support Louisiana's tax credit for film productions?

Downtown library groundbreaking delayed until next spring at the earliest

Architects working on the new downtown library and officials with the city-parish Department of Public Works are trying to work through several issues related to the design and construction of the planned 45,000-square-foot branch, which has a total price tag of $19 million. Among the most pressing issues is where to locate the construction staging area. The library is to be built at 120 St. Louis St., near City Hall, North Boulevard Town Square and the 19th Judicial District Court. City officials have always known that the staging area would present a challenge; they just haven't resolved it yet, says Jim Frey, DPW special projects architect and the liaison between the city-parish and architect Rex Cabaniss of WHLC Architecture, which was selected to design the library in a joint venture with Schwartz/Silver Architects of Boston. "I think the architect is looking at some things that haven't been presented yet to us," he says. "So we will wait to see what they come up with." Cabaniss declines to discuss potential staging options at this point. "That's not something we've been focused on," he says. One thing architects have been focused on is the envelope or building exterior. Preliminary design plans call for a metal-panel exterior that Frey fears may be too costly. "We want a building skin that is commensurate with the level of architecture but it's a balance," he says. "We need money for staging. We need money for the impressive cantilever. We need money for the building materials. Somebody has to come in and say, 'OK, we need to rethink some of this.'" Cabaniss declines to provide an estimated price tag for the project at this point. He says his team plans to soon do a mid-point price assessment, which it will bring back to the library board and the city-parish. Construction on the project was originally slated to begin by the end of this year. Now, officials estimate it will be some time next spring at the earliest. —Stephanie Riegel

Coursey Boulevard could see second Walmart Neighborhood Market

Walmart Stores Inc. has applied for a new building permit for a Walmart Neighborhood Market at the corner of Coursey Boulevard and Sherwood Commons Boulevard. The application filed with the city-parish Department of Public Works does not specify a street address for the proposed store. Both corners at Coursey and Sherwood Commons are currently occupied by a Shell station and ACGO Automotive, and there is a vacant lot that borders the Shell station to the south. According to the permit application, the project is estimated to cost $1.93 million and the store will measure more than 43,000 square feet. Walmart declined to comment on either the new project or whether it plans to keep open the Walmart Neighborhood Market farther east on Coursey near Jones Creek Road. Other recently submitted planning applications of note include:
• a new building permit application for a mixed-use addition to The Grove development called Addison, with commercial units on the ground floor and residential units above. The project is estimated to cost $13 million, will house a total of 175,000 square feet.
• a permit application for a new Circle K at the corner of Highland Road and South Boulevard. The project is estimated to cost $500,000, with the store totalling 4,000 square feet.
• a remodeling permit application for Burgersmith's second Baton Rouge location, as it settles into a new shopping center on Siegen Lane.
—Kelly Connelly

DSLD buys lots for Magnolia Lakes, Lake at Anselmo subdivisions

Denham Springs-based home builder DSLD has purchased additional lots for the third filings of two separate subdivisions in the Capital Region. DSLD bought 50 lots for the Magnolia Lakes subdivision off of Burbank Drive for $2.4 million from Magnolia Lakes LLC, according to records filed with the East Baton Rouge Parish Clerk of Court. It also bought 12 lots for the Lake at Anselmo neighborhood, just off Perkins Road between Essen Lane and Bluebonnet Boulevard, for $480,000 from Level Ventures LLC. DSLD partner Saun Sullivan told Daily Report after the company's second filing in Magnolia Lakes that it had a total of 100 lots at that time. DSLD prices homes in that neighborhood from $180,000 to almost $250,000. CFO Jeff Purpera Jr. said in April that he expects houses in the Lake at Anselmo to sell in a comparable range, for between $190,000 and $250,000. Construction on the second wave of Lake at Anselmo homes got underway early this summer. Purpera said the company plans to add another 12 lots to its holdings in the subdivision every quarter. —Kelly Connelly

ACT analysis: Scores same or slightly lower in La.

Average composite ACT scores for students in Louisiana were the same or slightly down from 2013 to 2014, depending on the way they were calculated, state officials announced this morning, while also noting that more students are taking the college preparatory test and more are scoring well enough to qualify for state TOPS awards. Louisiana began requiring all public high school students to take the ACT test last year, regardless of whether they planned to attend college. ACT scores are now used in figuring accountability ratings for schools and school districts. The education department notes in its analysis that students can take the test more than once. When students' best scores are considered, the state average score is 19.1, unchanged from 2013; when the "most recent" scores are averaged, the average is 19.2 for 2014, down from 19.5 in 2013. The department says it uses all public school seniors' highest ACT scores in figuring school performance ratings. The ACT testing organization uses the "most recent score" of students who take the test more than once. The analysis of test scores released today follows figures released earlier this year showing that more students are earning high-enough ACT scores to qualify for at least the minimum scholarship from the state TOPS program. The Associated Press has the full story.

Alexandria council moves toward $1.3M settlement with BR attorney

The Alexandria City Council on Tuesday indicated its willingness to pay more than $1.3 million to a Baton Rouge attorney for work he did in the city's lawsuit against Cleco, The Town Talk reports. But the City Charter won't allow a payment to be made as quickly as a federal judge would like, City Attorney Chuck Johnson says, so Johnson is trying to make arrangements that will satisfy the judge. The City Council voted 4-3 on Tuesday to authorize Johnson to proceed with a process so that payment of $1,320,457.40 can be made to attorney H. Craig Davidson. The action comes in the wake of a federal court order issued Friday by U.S. District Judge Dee Drell that the city had five business days to pay Davidson or else representatives of the U.S. Marshal's Office would seize the funds from Alexandria's Utility System Enterprise Fund. The 4-3 vote on Tuesday did not actually authorize the payment. The council will vote on that on Sept. 2. Davidson was hired in 2005 during the Mayor Ned Randolph's administration as one of the attorneys representing the city in a lawsuit alleging that Cleco, a Pineville-based utility company, had defrauded the city pay overcharging for electricity and other offenses. Davidson and Baton Rouge attorney John M. Sharp were to split 20% of any money awarded as a result of the lawsuit. Neither of them was still involved in the lawsuit by the time the city settled the case in February 2010 by signing a new power supply agreement with a "settlement value" of about $50 million. Cleco never admitted any impropriety. Davidson, Sharp and Alexandria attorney Bridgett Brown sought to collect about $5 million each—or 10% each of the settlement value. The city argued they only should be paid for the work they did. Read the full story.

News roundup: Jimmy Johns to open first Denham Springs location … Three-day candidate sign-up period in La. begins today … $1 really worth about $1.09 in La., analysis says

Here's the plan: Roger Wilder and John Tyler Davidson of One 12 Management Group will open Denham Spring's first Jimmy John's Gourmet Sandwiches restaurant, city officials have announced. "As soon as the process of the pending site selection is completed, construction should begin," says Wilder in a prepared statement. "We're certainly hoping for an opening before summer 2015." The specific location of the restaurant was not disclosed. One 12 Management Group also operates a Smoothie King franchise in Denham Springs and in May opened a Jimmy John's in Gonzalez.

Off to the races: Candidates for Louisiana's Nov. 4 election must officially sign up for the ballot this week. The three-day qualifying period opened at 8 a.m. today and runs through Friday. Contenders vying for any office from constable to a seat in Congress have to put up qualifying fees and sign paperwork. Candidates for local municipal races qualify with their parish clerk of court, but congressional candidates and contenders for state offices qualify with the Secretary of State.

It's all relative: How far you can stretch a buck depends on where you live in the U.S. And a new analysis by nonprofit research organization Tax Foundation, using data from the Bureau of Economic Analysis, shows the real value of $100 adjusted to reflect average price levels in each state. In Louisiana, for instance, $100 would be enough to buy what would cost $109.41 in a place where prices are closer to the national average. In a pricier state like New York, $100 is only worth about $86.66. See the full map.

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