Louisiana Issues Emergency Rule Changes to Industrial Ad Valorem Tax Exemption Program (ITEP)

On February 21, 2024, Louisiana Governor Jeff Landry signed Executive Order No. JML 24-23, significantly altering the criteria for participation in the state’s Industrial Ad Valorem Tax Exemption Program (ITEP). This executive action, signed during the Louisiana Association of Business and Industry Annual Meeting in Baton Rouge, marked a departure from the policies established by Landry’s predecessor, former Governor John Bel Edwards, through Executive Order No. JBE 2016-26.

ITEP serves as a crucial property tax abatement incentive aimed at fostering capital investment in manufacturing facilities across the state. Under the previous administration’s directives, additional requirements such as job creation and local input considerations complicated the application and approval processes, presenting challenges for prospective investors.

Landry’s Order introduced three notable amendments:

• Elimination of the job creation/retention requirement imposed by the prior Order
• Revision of the method by which local governments contribute input to ITEP applications
• Reduction of the timeframe for obtaining local input

Notably, the Order maintained the necessity of local input but centralized this process through a single parish committee—the Local ITEP Committee—comprising representatives from various local entities. This streamlined approach aims to expedite decision-making, with the Board required to transmit ITEP applications to the Local Committee promptly.

Local input remains integral, though in cases of disagreement between local and state authorities, the Board and Governor retain final decision-making authority, prioritizing the state’s best interests.

Crucially, certain provisions of the prior Order endure, including the 80% cap on property value abatement for initial and renewed contracts, and the exclusion of Miscellaneous Capital Additions (MCAs) from ITEP eligibility.

As planned, the Louisiana Department of Economic Development issued emergency rules implementing the changes directed by the executive order. The Order and the new rules apply to ITEP advances filed on or after February 21, 2024, while prior applications remain subject to previous regulations.

DMA’s Expert Analysis

Governor Landry’s Executive Order and the subsequent LED Emergency Rule publication expand the reach of ITEP, streamline the application and approval process, and create additional motivation for manufacturers looking to invest in Louisiana. Louisiana manufacturers and companies considering investing within the state should regularly review considered investment in Louisiana facilities to identify potentially qualifying investments. Managing the ITEP program proactively will help minimize property tax liabilities, freeing up cash flow for further investment. While all manufacturing operations will be impacted in some way, significant capital investments without associated job creation are perhaps the biggest winners.

If you are considering investment in Louisiana, DMA can help you assess and maximize potential savings from the ITEP program. Our property tax, credits and incentives, and site selection teams are well-versed in Louisiana’s ITEP program and other incentives.

If you have any questions regarding the application of the new ITEP rules to your planned investment, contact us today.