Could Monroe’s economic development district help pay for a community college training center?

Plain-English summary

Monroe asked whether its I-20 Economic Development District could contribute sales-tax-increment funds to a training center planned by Delta Community College inside the district. In July 2015, the Attorney General said the district could help fund construction if it determined that the center would advance an industry creating economic development and had a demonstrable, objective, and reasonable expectation of receiving at least equivalent value for its contribution.

The planned center included training space, classrooms, a clean lab, and room for companies considering a move or expansion in the district. The AG read La. R.S. 33:9038.34(M) as covering projects suitable for industries the district determined would create economic development. It then applied La. R.S. 33:9038.36 to the use of district funds. The opinion’s footnote connected the equivalent-value condition to the Louisiana Supreme Court’s Cabela’s decision on public expenditures.

Currency note

This opinion was issued in 2015. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

Was the training center automatically an eligible economic development project?

No. The AG conditioned its answer on the district’s determination that the center would further an industry creating economic development, or one of the industries listed in the statute, and on an objectively reasonable expectation of at least equivalent value in return.

Could the district contribute to a center built by a community college?

The AG said it could use district funds for the proposed center within the district if those project and value conditions were satisfied. The request concerned a cooperative endeavor with Delta Community College.

Why did the expected return matter?

The opinion’s footnote said a permissible public expenditure must have a public purpose, not appear gratuitous as a whole, and carry a demonstrable, objective, reasonable expectation of at least equivalent value to the public entity.

Background and statutory framework

Monroe established the I-20 Economic Development District under Louisiana’s Cooperative Economic Development Law. The proposed training center lay within the district, and the requested funds came from sales tax increment financing. The AG applied the economic-development-project definition in La. R.S. 33:9038.34(M) and the district spending authority in La. R.S. 33:9038.36 to those facts.

Citations

• La. R.S. 33:9020 (Cooperative Economic Development Law cited by the opinion).
• La. R.S. 33:9038.34(M) (economic development project definition).
• La. R.S. 33:9038.36 (district funding authority).

Source

• Landing page: https://www.ag.state.la.us/Opinions
• Original PDF: https://www.ag.state.la.us/Opinion/Download/15-0073

Original opinion text

J5itat.e of Ifioui£liana
DEPARTMENT OF JUSTICE
P.O. BOX 94005
BATON ROUGE
70804·9005
JAMES D. "BUDDY" CALDWELL
AITORNEYGENERAL

July 16, 2015
OPINION 15-0073

90·A-1 PUBLIC FUNDS & CONTRACTS
Hon. James E. Mayo
La. R.S. 33:9020 et seq.
Mayor, City of Monroe
The 1-20 Economic Development District ("District") may enter into a
Post Office Box 123
cooperative endeavor agreement to provide funds to Delta Community
Monroe, LA 71210
College to assist in the construction of an Advanced Training Center to
be located within the District provided the District receives at least equivalent value in exchange for its contribution.

Dear Mayor Mayo:

Your request for an Attorney General's Opinion has been assigned to me for research and reply. You have asked for our opinion as to whether the 1-20 Economic Development District ("District") may enter into an agreement with Delta Community College ("Delta"), whereby the District would provide funds to Delta to assist in the construction of an Advanced Training Center. According to your request, the Advanced Training Center will be physically located within the geographical boundaries of the District, and the funds in question were derived from sales tax increment financing in accordance with La. RS. 33:9033.

It is our understanding that the Advanced Training Center will contain petitioned off space to install and train potential employees with proprietary equipment, a clean lab training facility, additional classrooms, and economic development space. Your request further indicates that the Advanced Training Center would serve as a one stop shop for companies wanting to move or expand within the District. You believe the construction of the Advanced Training Center qualifies as an economic development project, and accordingly ask for our opinion as to whether District funds may be used to assist in the construction of the Advanced Training Center.

As noted in your request, the City of Monroe established the District pursuant to the provisions of Louisiana's Cooperative Economic Development Law, La. RS. 33:9020 et seq. Louisiana's Cooperative Economic Development Law provides for the creation of economic development corporations, as well as economic development districts. La.
RS. 33:9023, La. RS. 33:9038.32. Louisiana's Cooperative Economic Development Law further generally authorizes local political subdivisions to issue revenue bonds, payable from sales tax increments, in order to finance economic development projects.
La. RS. 33:9033.

La. RS. 33:9038.34 further governs sales tax increment financing by an economic development district, and authorizes the issuance of revenue bonds payable from

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Opinion 15-0073
Han. James E. Mayo
Page 2

revenues generated by economic development projects located within the economic development district. Subsection (M) of La. R.S. 33:9038.4 defines "economic development project," and provides the following:

M. For the purposes of this Section, the term "economic development project" shall mean and include, without limitation, any and all projects suitable to any industry determined by the local governmerital subdivision or, as appropriate, the issuers of revenue bonds, to create economic development. Economic development. projects shall include, without limitation, public works and infrastructure and projects to assist the following industries withiri the meaning of Article VI, Section 21 of the Louisiana Constitution:

(1) Industrial, manufacturing, and other related industries.

(2) Housing and related industries.

(3) Hotel, motel, conference facilities, and related industries.

(4) Commercial, retail, and related industries.

(5) Amusement, places of entertainment, theme parks, and any other tourism-related industry.

(6) Transportation-related industries.

(7) Hospital, medical, health, nursery care, nursing care, clinical, ambulance, laboratory, and related industries.

(8) Any other industry determined by the local governmental subdivision or issuer of revenue bonds, as appropriate, whose assistance will result in economic development.

La. R.S. 33:9038.34(M) limits the definition of an economic development project to only those projects that are "suitable to any industry determined by the local governmental subdivision ... to create economic development." Furthermore, La. R.S. 33:9038.34(M) goes on to list certain suitable industries for which projects would qualify as an economic development project.

Therefore, if the District believes that the Advanced Training Center will serve to further an industry it determines will create economic development, or serve to further any of the industries specifically mentioned in La. R.S. 33:9038.34(M), and the District has a demonstrable, objective, and reasonable expectation of receiving at least equivalent

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Opinion 15-0073
Hon. James E. Mayo
Page 3

value in exchange for its proposed contribution, then it is the opinion of this office that the construction of the Advanced Training Center qualifies as an economic development project under La. R.S. 33:9038.34(M).' Pursuant to La. R.S. 33:9038.36, District funds may be used to assist in the construction of the Advanced Training Center.

We trust this adequately responds to your request. If you should have any questions about the response contained herein, please feel free to contact our office.

Yours very truly,

. "BUDDY" CALDWELL
NE GENERAL

BY:
VALLAN orney General
JDC/MJV/as

I See Board of Directors of the Industrial Development Board of the City of Gonzales. Louisiana, Inc. v. All Taxpayers, Property Owners, Citizens of the City of Gonzales, et al., 2005-2298 (La. 9/6/06), 938 SO.2d 11 (the "Cabela's" case). In light of the Louisiana Supreme Court's decision in Cabela's, this office has consistently opined that in order for an expenditure of public funds to be permissible under La. Const. art. VII, § 14(A), the public entity must have the legal authority to make the expenditure and must show: (i) a public purpose of the expenditure or transfer that comports with the governmental purpose for which the public entity has legal authority to pursue; (ii) that the expenditure or transfer, taken as a whole, does not appear to be gratuitous; and (iii) that the public entity has a demonstrable, objective, and reasonable expectation of receiving at least equivalent value in exchange for the expenditure or transfer of public funds.