The first was the best of deals, both for Cobb County and for the recipient, the Atlanta Braves.
The other would be good for the recipient, but not so good for taxpayers or the Cobb school system.
The first-mentioned deal will see the Braves build a $672 million stadium in the Cumberland-Galleria area financed partly by revenue bonds from the Cobb-Marietta Coliseum and Exhibit Hall Authority and a variety of additional taxes on the business-property owners in that area. In addition, property owners elsewhere in the county would see their bills rise by the equivalent of $26 a year for the owner of a $200,000 house.
In return, the county would harvest a bounty of sales and other tax revenues from the stadium and the adjacent mixed-use development planned by the Braves. The stadium site would be leased to the Authority and thus would come off the tax rolls for the life of the bonds; but the surrounding plaza and entertainment district would start generating substantial tax revenues on Day One for the county general fund and the Cobb School System.
THE SECOND-MENTIONED deal would help developer John Williams, co-founder of Post Properties, build a $103 million project just east of I-75 at the Kennedy Interchange. It would be called “Riverwalk” and feature a 10-story office tower, 236 condos and 14 three-story townhomes.
Cobb Commission Chairman Tim Lee rejected Williams’ tax incentive request, saying it did not meet the threshold set by the county of creating 25 jobs and contributing $500,000 to the tax digest.
Yet his rejection letter also encouraged Williams to continue to work with the Authority and Tax Assessors Board to “secure other incentives.”
(Interestingly, other commissioners told the MDJ they were unaware of Williams’ request before reading about it in this paper.)
Despite Lee’s apparent opposition, the request was approved by The Development Authority of Cobb County. According to Authority Executive Director Nelson Geter, the county looked at the impacts of the office ($43 million) and residential ($60 million) components separately, rather than looking at them as a whole as the Authority did.
The two tracts on the seven-acre site eyed by Williams have an assessed value of about $6.1 million, according to the Cobb Tax Commission website. The two properties, now raw land, generated $46,433 for Cobb schools this year and $26,803 for the county. A $100 million development on the property would generate $756,000 for the schools and $436,000 for the county, according to estimates from the county finance office.
But if the development clears its final hurdle — validation of the bond documents by a Cobb judge — and is built, Williams’ company would pay taxes on only 10 percent of the property’s value in 2015, its first year of expected occupancy, 20 percent the next year, 30 percent the next and so on.
AMONG THOSE casting a wary eye at Williams’ request is Cobb School Board Chairman Dr. Michael Hinojosa, who told the Journal on Wednesday that he had written to the Development Authority expressing concerns about the project.
“This has the potential to have a significant impact financially on school funding,” he said.
“On the face of it, it’s not good for us,” Hinojosa added.
BUT IT WOULD BE a great deal for Williams, without question. His company would be enjoying what amounts to a taxpayer-subsidized development, and also could afford to charge his new tenants lower rent than the market rate for that area, giving him a competitive advantage over his rivals.
He told the Development Authority that the office tower component of Riverwalk would translate to 400 new jobs for Cobb, although critics say all he is doing is building office space and that other companies, not his, would be the ones actually bringing in the jobs.
There’s also the question of whether the new jobs in question would be truly “new,” or just jobs shifted to his building from elsewhere in Cobb or even elsewhere in the Cumberland/Galleria area.
CLAWBACKS: In order to qualify for such incentives, a developer has to file a report each year with the Development Authority charting their progress toward meeting their stated job-creation goals. That report is then shared with the assessors, according to Authority Chairman Clark Hungerford, whose board unanimously signed off on Williams’ request.
But the guidelines do not require the company to specify how many of the jobs are “new” and how many represent jobs from companies that have moved into the building from elsewhere in the county or CID.
There is a “clawback” provision in the guidelines, however.
If developers do not achieve the job-creation figures they promised, then the Assessors could require them to pay an additional amount in addition to the scheduled taxes, Hungerford told Around Town.
“However, this was never a problem in the past, as the number of jobs was always exceeded,” he added.
MORE CLAWBACKS: There may be changes ahead on the “clawback” guidelines.
Chairman Lee told AT on Thursday the ordinance in question needs to be more specific to make sure the county isn’t handing out subsidies that reward companies for luring jobs from one part of the county to another.
“It needs to be looked at,” he said. “We are in process of revaluating our incentive ordinance. We revised it last year. We look at annually to see what we’ve learned, if anything.”
UNFORTUNATELY, tax incentives probably are here to stay when it comes to attracting and retaining top-quality businesses that can help the county retain its economic dynamism. And the Braves deal, which will create thousands of jobs and spin off a steady stream of tax dollars to the county and school system from Day One, is a “net positive” for all concerned.
The Williams deal involves a premier developer and would result in construction of the Cumberland area’s first “Class A” office building in 12 years, both pluses. But the number of jobs to be created is much more speculative at this point, and the full tax benefits to the county and schools would be a long, long time in coming.
BIG QUESTION: The question remains what is the incentive criteria used by the Development Authority? Geter admitted it follows the county requirements 90 percent of the time.
However, AT has yet to see any clear policy or criteria for the other 10 percent of the deals (or another deal that falls into the 10 percent “bucket,” for that matter). So, was there a hard analysis of the project done by each Development Authority board member, a gut feeling, or is CID Chairman Tad Leithead the go-to consultant for getting these types of projects approved?
Sources tell AT that some on the Development Authority board are considering rescinding their vote and reevaluating the issue prior to the Dec. 18 bond validation hearing in Cobb Superior Court.
One thing is for certain: That hearing won’t be your typical dry bond validation hearing.
SICK BAY: Bomber Battery owner Larry Ceminsky is recovering at WellStar Kennestone Hospital from hip surgery earlier this week. … And retired MDJ political columnist Bill Shipp is recovering at home after a fall this week.
AUBURN ALUM Clark Hungerford figures he’s passed a gridiron “stress test” in recent weeks after having attended the Georgia game (which Auburn won on a last-second TD pass) and the Alabama game (which saw the War Eagles beat the No. 1 Crimson Tide on a last-second 109-yard return of a missed field goal).
“I figure if I can survive those two games I don’t need to see a cardiologist any time soon,” he quipped.