‘Tax Abatement-Gate’: It was almost ‘free money’ time for developers, with taxpayers picking up tab
by Ron Sifen
January 23, 2014 12:22 AM | 3241 views | 7 7 comments | 65 65 recommendations | email to a friend | print
Taxpayers have been congratulating the Cobb County School Board for successfully defending itself against the Development Authority of Cobb County’s attempts to give away millions of school tax dollars to a well-known developer. Taxpayers should also be thanking the CCSB for protecting the interests of taxpayers beyond this one misguided situation.

Taxpayers being forced to financially subsidize developers is a difficult issue. Sometimes it seems like there are circumstances where it can be justified. But every time government opens doors for a specific situation, there will always be those who can find the loopholes or fuzzy language that enable the opportunists to financially benefit, at the taxpayers’ expense.

Government officials tell us that they want tax abatements and other incentives to clean up crime-infested blighted areas. Then they tell us they want tax abatements to compete for new businesses that will bring new jobs.

But the Riverwalk property was not in a blighted area and Cobb County had already determined that the development would have created zero net new jobs in Cobb, based on Cobb’s criteria for the jobs they were trying to create. Cobb has never granted tax abatements for apartments, and apartments are the last thing for which we should be granting tax abatements.

Apartments typically require more county services than most other types of development. If anything, Cobb County should charge tax surcharges for apartment development to more fairly cover the cost of the services they require, compared to other types of development.

DACC says 90 percent of the time it adheres to Cobb County’s criteria, but sometimes it doesn’t. When asked about the other 10 percent, apparently DACC was unable to produce any alternative criteria.

The property in question is one of the most prime pieces of property in Cobb County. It is located adjacent to access to I-75 and I-285, and very close to the proposed Braves stadium, which further enhances the desirability of this property.

All around this property, all of the other properties have been developed without tax abatements. That includes other ultra-high-density mixed-use developments that include apartments.

If all of the other properties in the Cumberland area could develop without millions of dollars of tax giveaways, what is the evidence or criteria upon which the DACC decided that this developer could not develop this ultra-prime property without millions of dollars of tax giveaways? And again, the value of developing this property has been greatly enhanced in the aftermath of the Braves deal.

The Riverwalk tax abatement would give a competitive advantage for Riverwalk over other nearby similarly developed, competing properties. This could enable Riverwalk to offer leases at discounts compared to other nearby developers.

Why should DACC be issuing tax abatements that would benefit one developer over other developers, in an area that has many, many high-density developments, and in an area with a proven track record that tax giveaways are not needed to incentivize development in this area?

But the even bigger problem is that if the Riverwalk tax abatement had succeeded, it would likely have set off an avalanche of developers demanding tax abatements for almost any development. The CCSB correctly recognized this likelihood, and correctly recognized that this could potentially cost them far more in the future.

But the CCSB would not be the only victim. If we wind up with a tax abatement feeding frenzy for virtually all developers, the rest of the taxpayers of Cobb County would wind up paying the difference in higher taxes to make up for all the tax giveaways to developers.

Cobb County has criteria for tax abatements, which many would argue are already too generous. Riverwalk did not meet the criteria. Had this tax giveaway been finalized, DACC would have established a precedent that the new policy is no policy, and therefore all developers should line up to get taxpayer subsidies for any development. It would have been “free money” time for developers, and taxpayers would have had to pay for it.

The Cobb Legislative Delegation has been discussing steps to modify the power of unelected development authorities, or at least establish controls that prohibit them from giving away tax dollars totally indiscriminately, based on no criteria, and answerable to nobody.

The State Legislature should take a stand to protect taxpayers.

To the CCSB: Thank you for hopefully stopping Tax-abatement-gate.

Ron Sifen of Vinings is president of the Cobb County Civic Coalition.
Comments-icon Post a Comment
Kenneth Patterson
January 30, 2014
Ron is on the mark. Mr. Hankerson and his employees fail in their understanding of how to create jobs so that development can occur with out public money.
January 27, 2014
Ron is totally on the mark here. Yes, the larger issue is whether the non-elected Development Authority should be able to grant these 'discretionary' abatements the ten percent of the time they are not adhering to the agreed upon criteria.
Rich Pellegrino
January 27, 2014
Well said Ron !

A victory for transparency, accountability and ethics in government, which translates into a victory for the people!

Now let's apply the same logic to the "Braves/Chamber Gate" which is the epitome of back room dealing, use of funny and fuzzy numbers for "justification", and questionable ethics at best.
Bill Millette
January 24, 2014
Excellent article!
From Kennesaw
January 23, 2014
Another winner from Mr. Sifen. I hope and wish that people begin paying attention and question what has happened here in Cobb County previously.

Give aways and freebies to "friends"? Let the property taxpayer pay $14 more/year. They will not complain too much for only $14.

Keep up the great work Ron - you will keep the commissioners on their toes (the ones that haven't yet been tripped over).
D Welden
January 23, 2014
Excellent piece, Ron. Very good description of what I was afraid was about to happen.
J. G. Smith
January 27, 2014
Good article. What do our commissioners say about this and do hey feel the tax money should go to the schools as intended?

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