A financial executive on Thursday pitched Louisiana officials a tax credit program meant to jump-start major projects.
Scott Haber, president of NDH Capital, said Louisiana could start with a pilot program worth up to $55 million. He used a new Mississippi River bridge in the Baton Rouge area, considered one of the state’s top infrastructure needs, as an example of how the program might be used.
A new bridge is expected to cost about $1 billion. Getting started, including engineering, feasibility studies and the bid process, could cost $25 million.
The state would sell tax credits to institutional investors up front to raise money for those initial costs, but the credits would not be subject to being redeemed until five or six years later. By that time, in theory, the bridge would be open and the state would be making money from it through tolls (assuming there are tolls) and increased economic activity, Haber said.
“You’re never [paying] out of pocket, because you didn’t lose any revenue,” he said. “It’s not going to cost the state any money.”
Haber mentioned a new off-campus LSU arena as another theoretical example. In that case, the revenue would come from new businesses that started up nearby.
He says the credits are a useful financial planning vehicle for investors, who also may gain a public relations boost for helping to fund popular projects. He said the model has been successful in other states.
“My institutional investors will not tell you how to spend the money,” he said.
Rep. Franklin Foil, who chaired Thursday’s meeting of the House Study Committee on Public Private Partnership Financing where Haber made his pitch, proposed a bill to establish the tax credit program during this year’s session. Lawmakers decided the issue needed further scrutiny.