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Annova LNG President David Chung points to an artist's illustration of how an LNG export terminal at the Port of Brownsville would look.

BROWNSVILLE, RGV – Annova LNG has dismissed claims from environmentalists that it is looking to avoid paying its fair share of taxes should it build a liquefied natural gas export terminal at the Port of Brownsville.

Pointing to an application Annova made to the State of Texas for an Appraised Value Limitation under Chapter 313 of the Texas Economic Development Act, the Lower Rio Grande Valley Sierra Club says the energy firm hopes to cap the taxable value of its $2.9 billion facility at $25 million, less than one percent of the amount invested.

Jim Chapman, chair of the Lower Rio Grande Valley Sierra Club, said Annova is attempting to artificially cap the taxable value of its planned facility far below its actual value, thus reducing the taxes that they will pay each year. He pointed to a report sent to the State of Texas as part of the Appraised Value Limitation application on the benefits the company claims it will bring to the state. This, Chapman said, includes $34,389,000 per year in state and local taxes. But in a footnote to the report, he said, Annova “admits” that the figure does not take into account a “massive reduction” in the taxable value of its facility.

Jim Chapman of the Lower Rio Grande Valley Sierra Club.
Jim Chapman of the Lower Rio Grande Valley Sierra Club.

“The tax revenue that the Port Isabel School District loses out on from Annova will be paid instead through the Texas School Fund, meaning by all the taxpayers of Texas. Some call it an incentive, but it is really a shameless giveaway of taxpayer dollars to a huge company that can well afford to pay its full taxes, just like the rest of us do. Why should we subsidize an industrial facility that will endanger our communities, pollute our air, and undermine our tourism economy?” Chapman asked.

Bill Harris, a spokesman for Annova, responded: “Annova LNG is working with the taxing authorities to abate taxes for the period of construction and a little beyond to make the project more economically viable and attractive to potential investors. This is a common tool in Texas business and in no way indicates any avoidance to pay project taxes. Over the life of the Annova LNG project the taxes paid will be a great source of support for local schools, fire and police, and roads.  Any tax abatement is for a limited time and not the majority of the lifespan of the project.”

Again citing Annova’s Appraised Value Limitation, the Lower Rio Grande Valley Sierra Club and Save RGV from LNG claim Annova is only projecting to create ten full-time jobs at the LNG export terminal.

Again not true, said Harris.

“Annova LNG plans to have 165 full-time employees with a salary of approximately $70,000 at its Brownsville facility, should the project become fully operational. Nothing has changed, and the application clearly states this information,” Harris told the Rio Grande Guardian via email.

“When submitting applications to various taxing jurisdictions it is a widely known industry best practice to submit at minimum requirement levels or achievable levels of investment and job creation. This is both a protection for the company seeking the inducement and for the taxing authority, as it ensures long-term planning is accurate.”

In a news release, Save RGV from LNG said that in Annova’s application, its response to the question ‘What is the number of new qualifying jobs you are committing to create?’ was ten. The annual wage that Annova commits to pay those ten employees is $36,197.72, the news release stated.

Harris responded: “Annova LNG included 90 full-time jobs (ten qualifying and 80 non-qualifying) with a salary of approximately $36,000 on the 313 application because it was the minimum number of jobs and salary required by law to qualify for the incentive. The minimum number of jobs necessary to operate the facility is 90 employees.”

A non-qualifying job would be a contractor or vendor, or someone working part time.

Harris added: “The Texas 313 code requires ten full-time jobs to be created in order to qualify. Annova is meeting the legal requirement and will achieve the minimum employment level required to qualify for the value limitation program. Page 38 of the application binder very clearly notes that the average wage of the employee is expected to be above the minimum required average wage – $36k – for manufacturing jobs in the region.”

Save RGV from LNG spokesperson Stefanie Herweck said all of the political support for LNG in the Rio Grande Valley has been based on promises of jobs and tax revenues. Now, she said, there is evidence of one of the companies avoiding taxes in exchange for far fewer jobs than they are publicly promising.

“Annova LNG has publicly claimed that the liquefied natural gas export terminal that it has proposed for the Brownsville Ship Channel will bring scores of high-paying jobs to an economically depressed region.  But in documents that Annova filed with the state of Texas in an attempt to dramatically slash the taxes it will pay on its facilities, they paint a very different picture, the Save RGV from LNG news release states.

“Ten jobs, or even 90 jobs if you include non-qualifying jobs, fall far short of the number Annova has been promising as they try to win support from politicians, chambers of commerce and EDCs. And the salary they list on the application is half that of what they have been publicizing.”

Stefanie Herweck, a spokesperson for Save RGV from LNG.
Stefanie Herweck, a spokesperson for Save RGV from LNG.

Annova LNG President David Chung has said that once operational, his company’s export terminal would employ up to 165 workers at a base wage of $70,000.

“Annova tells us that this will be an employment bonanza when they need public support, but when they have to commit in writing, the number of promised new jobs drops to less than a Whataburger franchise,” Herweck said. “The RGV needs real, sustainable jobs, not Annova’s smoke and mirrors.”

Whether it is ten jobs or 165 jobs, building an LNG facility at the Port of Brownsville is not worth the price, Herweck added.

“Annova and the other LNG export terminals will be a huge blight, ruining the clear skies and natural beauty that are the drivers of our existing economy. Whether they create 10 jobs or 165, whether they pay their taxes or not, LNG is not worth the cost. And if we cannot trust these companies to be honest, we would be fools to hitch the future of our communities, our children’s health and the world that they will grow up in, to their promises,” Herweck said.

Numerous chambers of commerce and economic development corporations in the area have supported the LNG proposals of Annova and two other energy firms. However, Herweck said there is now pushback by concerned citizens. She pointed to a resolution of opposition from Laguna Madre Water Supply District and said Laguna Vista and South Padre Island city governments will be considering resolutions opposing LNG export terminal projects on Tuesday and Wednesday of this week respectively.