(Editor's Note: Between now and the November 6 election, the Press-Herald will examine each of the nine proposed Constitutional Amendments that will appear on the ballot.)
Proposed Amendment 6 would allow the city of New Iberia to grant ad valorem (property) tax exemptions to businesses that operate in areas newly annexed by the city.
"It's kind of a suburb," state representative Gene Reynolds said. "There's not a lot of difference between Lafayette and New Iberia. The two cities almost meet – they are growing by leaps and bounds down there."
State senator Robert Adley agreed with Reynold's assessment of growth in the area.
"Apparently that's some industrial/economic development that they've got going down there," he said. "If that's what they choose to do, it's OK with me."
According to the Louisiana Public Affairs Research Council (PAR) guide to the 2012 amendments, authority to grant this type of tax exemption can only come from one place.
"The Constitution lists which types of entities may receive an exemption from paying ad valorem (property) taxes and specifies under what conditions an exemption may be granted and how long it may remain in effect," according to PAR's guide. "Municipalities and parishes do not have their own authority to grant an exemption. In order to exercise sole authority to use this type of property tax abatement program, local officials must ask for an amendment to the Constitution."
New Iberia is located along the proposed I-49 extension. The city would like to encourage economic development; however, according to PAR, businessowners with land outside of the city limits currently have no incentive to cooperate.
"This goal has been complicated by the fact that New Iberia lacks some unique public services to offer property owners in exchange for additional city taxes," according to PAR's guide. "Under a previous local administration, the city police department was disbanded and law enforcement was taken over by the Iberia Parish Sheriff's Office. Further, although the city owns its wastewater treatment plant, the parish also has use of it.
"In the past, property owners approached about being annexed into the city generally rebuffed the effort," according to PAR, "citing the fact that they would have to pay a city property tax in addition to the parish property tax but would not receive added services."
Ad valorem (property) tax exemptions are one way New Iberia hopes to encourage those business owners to allow annexation into the city limits.
According to PAR, Amendment 6 uses the broad term "property," which could be applied to vacant lots, blighted properties with dilapidated buildings, land with well established businesses and so on. City officials have said their intention is to focus on vacant land intended to develop new business.
The proposed amendment is patterned after existing state tax exemption programs, which grant five-year contracts with the option to extend for an additional five-years.
If it passes, New Iberia would be the first municipality granted similar authority.
Proponents of Amendment 6, according to PAR, say it would enhance city officials' ability to promote new business in exchange for a short term reduced municipal revenue.
It also would give city officials flexibility to treat each contract individually.
"The contracts also could be tailored to specific property owners," according to PAR's guide. "For example, if the owner of a vacant piece of property wanted the land to be annexed and had plans to build a residential subdivision on it, the city could structure the contract so that the exemption ended as soon as the subdivision was built or the contract period expired, whichever came first."
Opponents of Amendment 6, according to PAR, say the law is unnecessary because city officials could set up a cash tax rebate program that does not require changing the state constitution.
Also, due to the amendment's broad language it could become a loophole for existing businesses that don't qualify for state programs to receive an exemption. Because terms of the contracts are up to city officials, a change in city government could result in a change in philosophy on granting exemptions.
"Tax exemption programs in general can cause tension between existing property owners who currently pay taxes and newly-recruited ones who get the break, giving rise to questions of fairness," according to PAR's guide.
A vote for Amendment 6 would allow New Iberia to grant an ad valorem (property) tax exemptions for existing businesses in areas newly annexed into the city limits.
A vote against Amendment 6 would prevent to city from granting such exemptions.