Member says she’ll give seat on DACC to schools
by Nikki Wiley
January 21, 2014 11:53 PM | 2976 views | 4 4 comments | 27 27 recommendations | email to a friend | print
CUMBERLAND — In the aftermath of a heated dispute over who gets to impact school funding, Development Authority member Karen Hallacy has offered to step down and give the Cobb Board of Education a spot on the board that doles out tax incentives.

Hallacy presented a plan to the Development Authority’s board Tuesday that would implement stricter criteria for businesses seeking incentives, but no action was taken.

Hallacy is challenging state Rep. Matt Dollar (R-east Cobb) for his seat in the Georgia General Assembly.

Her comments come a week after developers withdrew their application for tax abatement on a $103 million development near the new Braves stadium amid a storm of controversy involving the school board.

Cobb school officials objected to the 10-year graduated tax abatement for the Riverwalk project that included about 250 apartments and a 10-story office tower because they said it would take away needed revenue from a school system already facing a $79 million shortfall.

The debate called into question who has the authority to give away tax revenue. It also exposed the complicated, often murky process of how decisions are made about who gets treated to lucrative tax breaks and who doesn’t.

Riverwalk, backed by prominent developer John Williams, didn’t meet the county’s criteria for waiver of permit fees, which requires creating 25 jobs and contributing $500,000 to the tax digest.

Still, Hallacy and the rest of the Cobb Development Authority board offered a tax abatement worth millions because it is not required to follow the county’s lead.

Development Authority Executive Director Nelson Geter said his board, which is appointed by county commissioners, takes the county’s advice about 90 percent of the time.

In the remaining 10 percent, no written criteria has been found to exist.

If Riverwalk had been constructed without a tax break, Cobb schools would have gotten $7.8 million in revenue. With the tax break, it would have seen $3.5 million.

Hallacy: Clearer standards needed

Hallacy told the board a clearly defined rubric is needed to evaluate projects seeking incentives, but her proposal didn’t include what specific criteria she wants to see implemented.

She also said more specific measures should be put in place in case developers don’t hold up their end of the bargain.

“Cobb today is not what Cobb was in 1973 when this authority was created,” Hallacy wrote in her proposal. “We are no longer a rural bedroom community, but a well-developed, strong economic, vibrant powerhouse that business are drawn to, but we are competing with other strong economic powerhouse communities hoping to attract the same businesses.”

Authority Chairman Clark Hungerford, executive vice president of Vinings Bank, agreed Hallacy’s proposal has merits but was hesitant to give his endorsement.

“Economic development is an art, not a science sometimes, and so we’ve got to be careful while we try to establish criteria that everybody can feel good about we don’t do it in such a way ... that we end up losing a good prospect,” Hungerford said.

Williams has threatened to build his development in Fulton County if he doesn’t get the requested tax breaks.

Board member Richard Moore, managing director of external affairs for AGL Resources, also had reservations.

“I don’t want to lose a good opportunity,” Moore said.

Hallacy suggested a policy be put in place ensuring an impartial assessment takes place when companies ask for incentives.

In the case of Riverwalk, the authority relied on information from the developer, who said the 10-story office tower would bring 293 new jobs to Cobb. That information directly contradicted the assessment of the county’s finance director, who said it would bring no new jobs to Cobb.

“Somehow we have to know is that 300 a real number,” Hallacy said.

Hallacy steps back on incentive vote

Before Hallacy proposed clearer criteria for incentives, she backpedaled on a decision not to give a Smyrna company a $4.75 million loan for manufacturing equipment.

Hallacy’s initial stance was that no grants, loans or abatements be given until the authority takes up a new incentives policy.

But that changed when she was told by the authority’s attorney her vote was required to grant the loan.

A majority vote, four members of the seven-seat board, was needed.

But Hungerford recused himself from the discussion because the applicant is a client at Vinings Bank, where he serves as executive vice president.

And members Blake Kenya and Donna Rowe were absent. If Hallacy would have voted against the company’s request, the board would have been one vote shy of a majority required to grant the loan.

The authority’s attorney, Dan McRae with Seyfarth Shaw, told Hallacy it would be unprecedented to vote against a request from a manufacturer vowing to create jobs.

“There’s not a development authority in the state that would do that,” said McRae, a bond attorney who has also been hired by county Chairman Tim Lee to work on the county’s financing deal with the Atlanta Braves.

Board members also urged Hallacy to reconsider because the request for the loan is the second part of a promise made by the authority two years ago.

Bake One, owned by Atlanta Bread Co., was approved for a $10 million loan in 2012. About $3.25 million of that has already been granted and was used to buy equipment for the production of brownies and muffins.

A company representative told the authority the initial loan was expected to create about 28 jobs, but more than 50 have been added.

The $4.75 million loan the authority approved on Tuesday is expected to create 38 jobs.

Denying the loan would cause hardship for the company, board members argued.

“I didn’t have the history. That helped put it in perspective,” Hallacy said after changing her vote.

More fights could be ahead

Any new policy the authority adopts needs to happen quickly, Hungerford said, claiming the school board plans to oppose any new projects that impact its tax revenue until an agreement is worked out that pleases both parties.

“We need to get everybody on the same page to see if they continue with that stance or not,” Hungerford said.

Cobb Board of Education Chairwoman Kathleen Angelucci responded to Hungerford’s comment Tuesday afternoon by saying the school board was concerned with two issues on the Riverwalk project.

“First, the fact that this was an ‘office’ project meant that it could not qualify for tax abatements under the development authorities law,” Angelucci said. “Second, the board was concerned that the office project and apartment project both infringed upon the Georgia Constitution’s Educational Purpose Clause since the tax abatements did not promote education. The Georgia Constitution requires that tax revenue that is supposed to go to a school system be spent only on educational purposes. Our position has not changed.”

Hungerford also pointed to statements made by some Cobb legislators such as state Rep. Rich Golick (R-Smyrna) who have expressed plans to introduce legislation that would impact the makeup and power of development authorities.

“You ought not to change stuff until you understand how it works,” Hungerford said of Cobb’s Legislative Delegation.

Hungerford, whose wife Cheryl Hungerford is a deputy superintendent with the Cobb School District, wants to host a meeting of the players who are involved in granting tax incentives, including the Cobb Board of Commissioners and Cobb Board of Tax Assessors. Local lawmakers and the media would also be invited, he said, so they could be “educated” about how the authority works.

“Otherwise we run the risk of going through the same situation we’ve been through,” Hungerford said, alluding to the battle over Riverwalk, which he called a “waste of time.”

Comments-icon Post a Comment
January 22, 2014
Karen, it seems that the other members of the Development Authority are interested only in the "BIG" business of Cobb. I would like to think that it is the big business that helps Cob, but in fact, it helps other businesses, neglecting the schools. You have made an admirable statement. It is a statement that will get you my vote, along with a few others that I spoke with today. We are in the 45th district. I can tell you that with all you are doing for education, I (as well as others in East Cobb) believe you have a great opportunity to win the seat.
Just Wait
January 22, 2014
Hallacy, stop pandering to your political base! Let me remind you that you vote FOR the tax abatement and only after the storm blew in did you start changing your position. Your position on the Authority is not yours to give away, only give up, which would be a good idea. Anyway, the school board has already said they did not want "their" person on the Authority. Don't you read the paper?
January 22, 2014
I don't necessarily agree that the development needed the tax break, but even with it, it would have paid $3.5 million a year to the schools. Over the 10-year abatement period, that's $35 million. So, the schools "won" because they got the developer to withdraw? "Hey, we won! He withdrew and now we won't have to take that $35 million!"
Nicely Said
January 22, 2014
Nicely said Karen "You will step down to give your seat to the school board!" Just one little problem - I am an appointed person to a board by a Cobb County Commissioner just like you are, you can not decide what to do with your position you were appointed! It's a great headline, and you tried to play to the "Stupid" of Cobb County but there are not that many out there especially in the area where you want to run for office. Oh yes, you can step down but why don't you try to do your job and why don't you focus on the research it requires when it comes to giving away our taxes.
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