Riverwalk, a mega-development to include 236 condos, 14 three-story townhomes and a 10-story office tower, will be the recipient of a property tax subsidy from the Development Authority of Cobb County.
The project didn’t meet the county’s requirements of creating 25 jobs and contributing $500,000 to the tax digest, but the Development Authority is moving ahead anyway with waiving property taxes. It has the authority to act on its own when offering tax abatements.
Cobb School District Superintendent Michael Hinojosa said the process is moving too quickly, and he needs time to determine how losing that tax revenue could affect the school system that is facing an $80 million deficit.
The two parcels that make up the 7 acres of undeveloped land are currently valued at about $6.1 million for tax purposes, according to the Cobb County Tax Commissioner’s website. That raw land generated $46,433 for the Cobb School District in 2013 and $26,803 for the county.
But if developed into a $100 million development, as proposed by financial backer John Williams, the site would pump more than 15 times that amount into county coffers, with $436,400 generated for the county and another $756,000 for Cobb schools, according to estimates provided by the county finance office.
But Riverwalk won’t be paying those taxes to the schools and county government if the proposed tax abatement goes through as planned.
Tax assessors deny request for delay
Hinojosa sent a letter to the Cobb Board of Assessors saying he had “only recently learned of this initiative” and “this has the potential to have a significant impact financially on school funding,” but the board opted not to delay action.
Typically, Development Authority projects are filed with the assessors’ office 30 days before action is taken, providing time for review. Though the project was filed on Nov. 20, just 14 days before Tuesday’s meeting, the assessors’ office voted to waive its review period and move forward.
Assessors unanimously voted on Tuesday to approve the method by which the property is made tax exempt. Because the Development Authority is a government agency, it doesn’t pay taxes and Riverwalk’s developers can skirt paying taxes by leasing the property from the authority for 10 years.
Riverwalk will pay no taxes until construction is finished in 2015 and the buildings have been cleared for occupancy. Then it pays on 10 percent of the property value in year three, 20 percent in year four and so on until year 12 when it assumes 100 percent ownership of the property.
Cobb Tax Assessor Stephen White said the board doesn’t have the ability to stop a tax break.
Dan Post, member of the Board of Assessors, said the school board’s concerns don’t impact decisions of the assessors.
“Since I’ve been on the board, this is the first time we’ve ever had this type of communication from the school board,” Post said on Wednesday. “I don’t take the superintendent’s request lightly, but again ... really the question for us today is, ‘Is the valuation presented today correct?’”
Development Authority executive director Nelson Geter said he understands the school system’s worries.
“We understand their concern and, of course, we want to always make sure that the public school systems are as solid as possible and, like I said, I think that we’re in position at this particular point to sit down and listen to their particular concerns,” Geter said.
Balancing economic growth with education
Cobb Schools Chairman Randy Scamihorn said he supports local businesses but is concerned about how quickly the tax deal is progressing. He’s not for or against Riverwalk’s tax break, but wants to learn more about how it could affect education in the county.
“I’m pro-Cobb County development, but we also have to make sure that our school systems have enough money to maintain our excellence in education,” Scamihorn said. “That’s why people want to come here.”
Cobb is attractive, Scamihorn said, because of its well-educated workforce and low taxes.
“Those taxes can’t remain low if we keep giving tax breaks on what everyone else is paying,” Scamihorn said.
Hinojosa also pointed to the school system’s $80 million deficit and said either expenses have to be cut or revenue has to be increased.
“On the face of it, it’s not good for us,” Hinojosa said.
It’s about making sure “voices are heard and there’s not any unintended consequences,” Hinojosa said.
“We’re all big fans of economic development. We understand that. We get that,” Hinojosa said. “But at the same time, we want to make sure our schools’ revenue is considered in any kind of economic development.”
FACTS AND FIGURES
HOW THE DEAL WENT DOWN:
• The Cobb Board of Commissioners approved a re-zoning for the property on Sept. 17, giving John Williams’ Riverwalk development the go-ahead.
• Also on Sept. 17, the Development Authority approved a resolution of intent to issue $103 million in bonds for Williams’ proposed apartment building and office park. Those bonds will allow the authority to purchase the property and lease it back to the developer, who avoids paying property taxes.
• Paperwork seeking property tax breaks was filed with the Cobb Board of Tax Assessors on Oct. 23. The Development Authority met again on Nov. 15 to finalize its approval of the bonds.
A committee of high-ranking county staffers including DOT Director Faye DiMassimo and Michael Hughes, economic development director, denied an incentives request for waiver of permitting fees on Nov. 18.
IS IT A DONE DEAL?
• No. A Cobb Superior Court judge will have the final say when the bonds go up for a validation hearing on Dec. 18, giving an opportunity for the public to challenge the bond deal. If not successfully challenged, the judge will validate the bonds and the tax break will kick in as soon as the Development Authority takes ownership of the property. Closing on the deal is expected before the end of the year.
WHO’S BEHIND IT?
• While Cumberland-based Greenstone Properties is listed as the developer of record for Riverwalk, one of John Williams’ companies is involved as a financial backer.
• Williams founded Post Properties Inc. in 1970 and has directed the development of more than $5 billion in real estate during his career. He led the effort to build the $150 million Cobb Energy Performing Arts Centre and its main theater, The John A. Williams Theatre, is named for him.