After the Cameron County Commissioners Court tabled a contract with Annova LNG that would have granted the multi-billionaire company $25 million in tax abatements for 10 years, a spokesman for the company told the local daily that they wouldn't quit trying.
At the time, Annova spokesman Bill Harris said companies like his use such incentives to bolster their projects and that they make attracting additional private investment easier. Annova’s initial $3 billion investment in the construction phase of its LNG plant on 650 acres on the south bank of the Brownsville Ship Channel and cost approximately $3 billion.
“Even with the tax abatement that we are requesting today, over the next 20 years, the County will collect over $40 million in taxes,” countered Casey Kelley, senior government affairs manager for Exelon Generation, the parent company of Annova LNG.
So far, no one – not one countywide elected official or a candidate for public office – has come out against the granting of the abatements. The taxing entities that have come out against giving the multi-billionaire companies has been the board of the Port Isabel Independent School District. The stood to lose about $125 million in taxes from the Liquefied Natural Gas exporters over the same time span.
The towns of Port Isabel, Laguna Vista, South Padre Island, the SPI Business Association and the Laguna Madre Water District have all come out against their construction on the Brownsville Ship Channel.
But given the fact that the companies behind the three proposed LNG terminals were granted lease options on acreage by the Brownsville Navigation District pending their applications with the Federal Energy Regulatory Agency (FERC), the initial step in the roughly two-year permitting process, it is almost a certainty that something will be built out there.
Those prefilings commit the LNG firms to significant investment and indicate they are putting the money where their mouth is and mean to stay here.
The three companies are Annova LNG, NextDecade and Texas LNG Brownsville, all headquartered in the Houston area.
The three companies are Annova LNG, NextDecade and Texas LNG Brownsville, all headquartered in the Houston area.
Their plan is to build facilities to convert natural gas into a liquid state (accomplished by chilling it to minus 261 degrees Fahrenheit) in order to shrink its volume for shipment aboard special LNG vessels to overseas markets in Asia and elsewhere.
The commissioners of the Port of Brownsville approved the lease options and cannot really deny them the land if the companies comply with the state and federal regulations to set up shop here.
The request (and tabling) of the abatements comes at a time when the state of county politics is in a flux. If the current office holders – appointed County Judge Pete Sepulveda, Pct. 1 commissioner Sofia Benavides, Pct. 2 commissioner Alex Dominguez, Pct. 3 commissioner David Garza, and Pct., 4 commissioner Dan Sanchez – had approved the abatements, this is the scenario that would develop.
If Sanchez and Dominguez opt to run for the nomination for county judge in the Democratic Party primary this coming March, they will have to resign. The filing period for the primaries is from Nov. 14 to Dec. 14 with the election March 1.
If they do resign, it will mean that three appointed county commissioners will make up the majority of the board (Sepulveda and two other commissioners he will appoint as county judge). This majority – if it approves the abatements as the original contract with Annova stated – would approve a full 100 percent abatement on taxes that will take $25 million from the county during that time.
Currently, commissioners did not approve the 10 percent raises for law enforcement personnel at the sheriff's department and the constables who are in dire need of new equipment and are losing officers to state and federal law enforcement bodies such as the Texas Department of Pubic Safety, U.S. Customs and the Border Patrol. The county cannot really afford to subsidize these multi-billionaire multinational corporations and do without.
The LNG export terminals are not scheduled to start operations – contingent upon getting FERC approval – until 2020. By then, a totally different commissioners court will be sitting.
If Sepulveda and his two appointees lose their elections for county judge and commissioners and they vote to award the abatements, this means that they will have effectively tied the hands of the incoming board.
"What's the hurry in making this decision on the abatements?," asked a county official. "The FERC application last about three years and construction another two. Things might have changed in the meantime. Why would you want to tie the hands of the incoming board and make them assume obligations when the county could use the money from the taxes?"
"It's not," he said, "as if the companies could go anywhere they wanted. The Port of Brownsville is the closest deep-water port to their potential international clients for LNG. So why give away the store and make the local taxpayers shoulder the bill for them?"
5 comments:
So, if Alex Dominguez and Dan Sanchez resign to run for County Judge, and two new commissioners are appointed to fill their term....that means the majority on the County Commission would be "Non Elected". That sounds like a scenario that Tony Martinez would feel comfortable with. As a voter; and a voter who thinks the Port should not tax us, I would prefer to have elected officials make up the voting majority. That being said, there will be a lot of pressure on the current board to vote for the abatement, and not kick the can down the road. A question that I have is "Who actually owns the property along the ship channel....is it the Port, or is it private owners, with the Port serving as the real estate agent. And, how much of the money paid out will go to the Port and how much will be forwarded to the individual property owners. That is a figure that the Port should be telling us about. But, oh, I forgot, Eduardo Campriano and his Board of Idiots don't want the citizens to know anything....
Remember the Point Isabel School District is a DONER district and currently sends about $17 million dollars to the state from the taxes it collects each year, and all of the taxes it collects from the LNG companies will also go to the state, a net gain of $0.00 for the school district. Having said that, if they had agreed to the tax abatement, because of the strange laws, they would have kept about $100.00 per student from the money they already send to the State. Granted, the law doesn't make much sense, but that is Austin.
Excellent article Juan. Finally some good reporting on this important subject for our community.
But we have no monopoly on location. A big LNG plant is already under construction on the USA's East Coast, and will be closer to Europe. Our nearest competitor is Corpus, already under construction and placing half page want ads in the Brownsville Herald. Biggest want ads they have seen in a long time. Others already far ahead of Brownsville are two in Sabine, Pass, LA, another in Hackberry, LA, and one in Freeport, TX
There are also two new ones in the works for Canada, and an existing one in Peru. Australia and Indonesia also already have, and are building even more LNG plants. Not to mention existing older plants in the middle east and Africa.
Brownsville, is very, very late getting into this LNG game. Will we be a day late, and a dollar short--yet again? Typical for us. We will be lucky if we end up getting even one of them.
Brownsville may be late in getting into the LNG game, but does that make the environmental threat any less important. Saying "Brownsville is very, very late getting into this LNG game" doesn't convince me that its a good game to be in.
Juan according to the news reports krgv the FERC always no matter what the public says or don't say will always approve the permits for building these LNG plants. So there we are done no sense in fighting they say. But if these plants are and will be built then NO city or county should not be giving them any tax abatements, let them pay their way now, my opinion.
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