Tax breaks approved for Ergon Refining|[9/21/06]
Published 12:00 am Thursday, September 21, 2006
An array of tax exemptions for Ergon Refining Inc., fueled by anticipation of big gains when the company expands its existing operations and its foray into the ethanol business, were approved by Warren County supervisors Wednesday.
The exemptions are based on the company meeting minimums set forth in expansion plans.
The company sought and received the board’s nod for a 10-year fee-in-lieu of ad valorem and property taxes amounting to one-third of the tax levy, including school taxes, provided the company’s plant expansion reaches $100 million.
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According to Ergon executives who discussed their intentions with the board last week, the bulk of its expansion plans at its Vicksburg Harbor refinery should total $113 million and include purchasing new equipment, providing about 11 jobs and adding $665,000 a year to the company’s payroll.
If the company’s investment does not total $100 million, the county will still look into issuing industrial development revenue bonds or a smaller expansion exemption.
The other half of what the company asked for dealt with its joint venture with Bunge North American Inc. to build an ethanol plant in Vicksburg by late 2007 with an annual capacity of 60 million gallons of the corn-based fuel. When completed, company releases have said, the plant will employ 32 people with an annual payroll of $2 million.
For that development, the company sought and received a commitment for free port warehousing within an inventory tax exemption and one on finished goods. As with its other request, if construction costs do not exceed $100 million, the county will consider industrial bonds or an expansion exemption.
Although supervisors were receptive to the company’s requests, District 4 Supervisor Carl Flanders offered a substitute motion taking the free port warehousing language out of the resolution. It died without a second.
“We’re being asked to do something we haven’t done for any other industry. It would set a precedent,” he said. Flanders then voted no on the second proposal.
Ergon maintains multiple operations on Vicksburg Harbor, including an oil refinery that produces specialty oils for larger machinery. The Jackson-based company employs about 600 in Warren County.
A main point of debate was the request for free port warehousing. Typically, businesses are taxed on the cost of their industrial inventory as part of their personal property reporting to the county.
Free port warehousing is figured based on whether a company has shipments inside Mississippi or outside the state, with the latter providing the more generous exemption. Since Ergon asked for it on goods shipped outside the state, it raised the concern of some.
“We need to have a policy on free port warehousing,” District 3 Supervisor Charles Selmon said, whose motion to direct the Assessor’s Office to achieve that end was approved unanimously.
In voting to support all the company’s requests, District 5 Supervisor Richard George said Ergon’s economic impact “means a lot in this community” and represented a known commodity.
“I’ve never liked exemptions, but it’s a necessary tool for economic development. If they don’t hit those marks, the thing’s off. They’ll get hit with the full tax,” George said.
In other business, supervisors approved a lease signed by Warren County Port Commission to allow an Oklahoma-based company to explore for oil and gas.
Samson Resources Company and the commission agreed to lease six tracts of land on about 1,500 acres near the south end of E.W. Haining Industrial Center at the Vicksburg Harbor.
Terms of the agreement were not disclosed.
The board adjourned until Oct. 2 at 9 a.m.