Developer withdraws bid after school board rejection
by Nikki Wiley
January 16, 2014 11:30 PM | 7341 views | 18 18 comments | 44 44 recommendations | email to a friend | print
Staff/Kelly J. Huff
Staff/Kelly J. Huff
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MARIETTA — Following a contentious debate among the Cobb School Board and developers, the company behind a $103 million mixed-use development has withdrawn its application for a lucrative tax break.

Just an hour and a half before a court hearing was scheduled to take place to validate bonds financing a property tax abatement, the Development Authority of Cobb County said the developer of the planned Riverwalk project withdrew his application.

The project, backed by real estate developer John Williams and overseen by his consultant, Tad Leithead, had been approved for 250 apartment units and a 10-story office tower.

But developers soon found themselves at the center of a controversy over incentives: When are tax breaks appropriate, how should they be doled out and who should control who qualifies for them? Should these lucrative deals be handed out solely by an unelected board such as the Development Authority, or should the elected county Board of Commissioners have final say?

These are all questions that remain to be answered in the aftermath of Thursday’s news that Leithead had withdrawn his application for Riverwalk incentives.

Though Riverwalk didn’t meet Cobb’s criteria to qualify for incentives, which includes creating 25 jobs and contributing $500,000 to the tax base, the Development Authority of Cobb County offered Riverwalk a 10-year graduated tax break much to the dismay of the school board, which faces a $79 million funding shortfall.

“This project would have provided over $3 million in additional property tax revenue to the district over 10 years, which would assist in helping resolve budget shortfalls. The winner of this quest needs to be the children of Cobb County; in this instance, they are losers,” said banker Clark Hungerford, chairman of the Development Authority, on Thursday morning, regarding the prepared statement.

School officials rejected an offer Wednesday to settle the dispute.

Hungerford accused the school board of not giving a response to the Authority’s offer until the “eleventh hour.”

Instead of taking the Development Authority’s offer, on Wednesday the school board requested the application be withdrawn and the county draw up a new policy on tax incentives — one that presumably gives equal say to the Cobb Board of Commissioners, the Development Authority and the school board.

School officials say problem not solved

Hungerford said in the statement the project would have helped jumpstart development in Cobb following the Great Recession and help the school board overcome its budgetary woes.

Tax abatement is just one tool, Hungerford said, that can be used to attract projects, but it can also be used against Cobb if the county does not remain competitive.

Hungerford shifted the focus toward the school board saying the Development Authority had “numerous meetings” over the past two months attempting to resolve concerns.

One of those meetings took place last Tuesday where political heavy weights such Attorney General Sam Olens, former Gov. Roy Barnes and Cobb Chairman Tim Lee told some school board members in a closed-door meeting they were on a path that could harm economic development.

Still, Hungerford said the Development Authority hasn’t closed the door to future discussions and the group’s tax abatement policy will be up for discussion at the Authority’s next meeting at 11 a.m. Tuesday.

Cobb Schools Vice Chairman Randy Scamihorn said he wants to find a way to prevent the same situation from recurring.

“Cobb County needs economic growth so we need to continue to work together so that we can make those kinds of things happen,” Scamihorn said.

It’s not a “win-lose situation,” he said, but is about improving communications.

School board member David Banks said there’s “no malice whatsoever” but legislation is likely needed to ensure the county’s schools have a say when tax breaks are up for grabs that cost the schools revenue.

“This would have probably been a non-event if the school board had proper representation on that Authority,” Banks said.

School officials aren’t against the project, Banks maintained, but the school district’s taxing authority is in jeopardy and they don’t take that lightly.

Withdrawing its request for tax abatement doesn’t solve the underlying issue, Banks argued.

“Let’s don’t get in this situation again where we have this kind of confrontation,” he said.

Future of development unclear

No school board members or developers appeared in court on Thursday when Cobb Superior Court Senior Judge Michael Stoddard was scheduled to hear arguments.

Because the developer requested to withdraw its application, Cobb District Attorney Vic Reynolds said the case would be dismissed. The district attorney’s office steps in with every bond validation, regardless of why a bond is sought.

“Most of the time the DA is prosecuting bad guys, which is what a DA ought to do,” Reynolds said adding that his involvement is mandated by the Georgia General Assembly.

Tad Leithead, consultant for Riverwalk, handed a prepared statement to members of the media after the 10-minute hearing on behalf of Riverview Office LLC. He declined to answer questions.

Leithead also serves as the chairman of the Cumberland Community Improvement District, where the proposed Riverwalk site is located. The CID was founded by Williams.

The statement said the company had “no choice but to withdraw our application for incentives which were granted to us by the Cobb Commission, the Cobb County Development Authority, and the Cobb Board of Assessors.”

The Cobb Board of Commissioners did not grant incentives for the project because it failed to create the needed jobs, but Chairman Tim Lee encouraged the company to seek tax abatement through the Development Authority.

“We relied on that commitment and bought the land and spent millions of dollars in planning the development with the intent of developing a magnificent project at the gateway to Cobb County” Leithead’s statement said.

He went on to say the company “attempted several times to settle the matter with the school board, but were not successful.”

The future of the 7-acre tract in Cumberland is now uncertain.

“We will look to alternatives, which would include selling the property or developing it with less investment and no office building” Leithead said. The latter option would mean going forward with the planned 250 apartment units.

Supporters had hailed the project as a boon for Cobb because the proposed office tower would be the first “Class A” luxury office building to come to the county in more than 12 years.

Comments
(18)
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East Cobber
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January 17, 2014
Short term thinking is not what made Cobb County great. This property would have generated significantly more tax dollars over the next 10 years than it would in its present state. IDIOTS!
It still can
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January 18, 2014
It can still generate more tax dollars unless Williams does not build out of spite. There are many lucrative projects that can be built on that property. Stop whining.
Cobb Taxpayer
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January 17, 2014
I am shocked that the folks in East Cobb would support another "apartment rental" complex of that size in such a prime location to the workplace.

Just look at the new single family developments around Wildwood and such.

Cobb does not need additional Franklin Road, Powers ferry and Akers Mill Apartment isses. Clean up the old messes (developmnets) of Post and Mr. Williams and then build some nice ownership housing.
Dave Z
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January 17, 2014
It boils down to this: There are guidelines for incentives. This developer tried to use his connections to get around the rules. The MDJ pointed this out, which then brought the entire tax incentives process into question.

At the end of the day, this developer brought this mess upon himself by trying to get around the rules everyone else must follow. And now the entire process is in the spotlight, which is a fair, sensible and fortunate outcome.
Reader2014
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January 17, 2014
Thank you MDJ for your reporting. Citizens would be in the dark if it were left to the politicans. Thanks for keeping citizens informed.
Say What??
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January 17, 2014
This is all really sad. Now you want politics and politicians involved to make decisions. How is that working for you so far with our current government. Now the school board can have their meager $40,000 a year the property currently generates. Congratulations on a great business decision school board. Guess that is going to drive down the deficit. P.S. give it a rest about the children suffering. The school board already get $800,000,000 from us. How much more do they need.
Samuel Adams
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January 17, 2014
I suspect you already know that accountability is the reason people want their elected representatives involved. We want to be able to hold them accountable! This contretempts highlights crony capitalism in our county and the fact that certain people, who mostly rightly call themselves philanthropists, also believe they deserve favors above what us regular people are given.

Bummer for them in this case.
ECP
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January 17, 2014
You really have no idea of that which you talk about. if you did, you would realize that it is not the school board that has created the deficit. It is the fact that they give 130 million to counties like Gwinnett each year in what is called Local Fair Share. If Cobb County was allowed to keep their money, there would be yearly excesses in funds. So, please don't talk unless you are sure of what you are talking about.
HotinAtlanta
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January 17, 2014
"Tad Leithead, consultant for Riverwalk, handed a prepared statement to members of the media after the 10-minute hearing on behalf of Riverview Office LLC. He declined to answer questions. Leithead also serves as the chairman of the Cumberland Community Improvement District, where the proposed Riverwalk site is located. The CID was founded by Williams."

Does anyone else see a conflict of interest here and possible pocket lining? I do.
ECP
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January 16, 2014
You would think that with Clark Hungerford's wife holding a high position with Cobb County School District that he wouldn't be so fast to blame the school board. So…..what happens now that Tim Lee's ducks, which he thought were in a row, are no longer in a row? Perhaps those who were against the stadium deal were not so wrong.
west Cobb3
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January 16, 2014
"...Riverview didn’t meet Cobb’s criteria to qualify for incentives...". There's your problem.

Justify Cobb
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January 16, 2014
Clark Hungerford is just upset his "pal" John Williams did not get his "greed" tax break. If John Williams is such a Cobb County supporter he should apologize for how this process has been handled. The Development Authority has embarrassed themselves.

Let's just see if Williams is a man of his word......this project will not go forward in Cobb without the tax break, go to Fulton John.....good riddance.
Tony Cain
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January 16, 2014
It's a heck of a thing when the law has to be obeyed.

Lib in Cobb
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January 16, 2014
OK, John Williams your play.
Craig Kootsillas
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January 17, 2014
This was his play. He dodged an investigation.
anonymous
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January 16, 2014
I am unsure how Clark Hungerford thinks the school board waited until the 11th hour, when in fact the board of education only learned of the cut in their funding at the last minute.

It seems that the only people, involved with this process, looking out for the taxpayers and insisting on transparency is Karen Hollacy and Donna Row.
Craig in Smyrna
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January 16, 2014
It was not a "cut in their funding. Offering the incentive meant the county would get a minimum of $3.5m in additional revenue instead of $7m. Maybe they could have negotiated for more but its still a net gain in revenue for the county.
Just Wait
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January 16, 2014
If Hallacy and Row are such heroes for the tax payer, why did they vote in favor of the tax break to begin with and only voice opposition when the firestorm began? I don't know about Row, but Hallacy is only looking out for her political future.
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