The bill would broaden the power of development authorities to dole out tax incentives on specific types of projects.
“My greatest objection is that this bill has the potential to further defund education in Georgia by extending the exemptions from paying school taxes to selected parties,” said Tippins, a west Cobb Republican who chairs the Senate Education Committee. Georgia law allows for the creation of development authorities throughout the state for the purpose of developing and promoting the public good and general welfare, trade, commerce, industry and employment opportunities. Board members are not elected but appointed by county commissioners.
Some critics believe developer John Williams is behind the bill after striking out in court with the Cobb Board of Education over a development he wanted to build in Cumberland.
The Development Authority of Cobb County, chaired by Vinings Bank Vice President Clark Hungerford, approved a financing deal that would have allowed Williams to escape paying millions in school taxes on the development. The school district challenged the proposal in court, and Williams and his consultant Tad Leithead withdrew the application.
Already passed the Senate
The bill has already sailed through the Senate and is now in the House waiting for approval.
SB 353 is sponsored by Sen. Brandon Beach (R-Alpharetta), who is CEO of the Greater North Fulton Chamber of Commerce and executive director of the North Fulton Community Improvement District, a board on which Leithead serves. In the House, it is sponsored by state Rep. Ed Lindsey (R-Buckhead). Lindsey is running in the May 20 Republican primary for the seat being vacated by U.S. Rep. Phil Gingrey (R-Marietta).
Of the six senators who represent Cobb, Hunter Hill (R-Smyrna) and Steve Thompson (D-Marietta) voted for the bill, Tippins and Horacena Tate (D-Atlanta) voted against the bill, and Judson Hill (R-east Cobb) and Bruce Thompson (R-White) did not vote and were marked “excused.”
Tippins explained his opposition by noting the types of properties considered under the new development authority law — hotels and motels, nursing homes, and office buildings — that could qualify for tax abatement.
“While they can be done under the bonding authority of a development authority they are not exempt from local ad valorem taxation according to the language of these bills, currently,” Tippins said.
Tippins said the bill would essentially allow local governments to pick winners and losers in the market place.
“I believe the reason that the law as it stands currently did not give them the exemption because all of these are properties that are operated by for-profit entities, and since they operate for profit, they’re in competition with other business entities that do not get these incentives. That’s why I oppose the bill,” Tippins said. “You’ve got to look at the fairness of the competition.”
Destabilizing school revenues
That’s not the only reason Tippins opposes the bill.
“I also oppose it because every time you extend an additional exemption, which that is what this bill does, you’re taking away any possibility of taxation by the education agencies as long as the title of the property is vested in the development authority,” Tippins said. “We’re already in a funding crisis in education and this further exacerbates the funding crisis that we have by exempting additional properties by statute.” Angelucci said she doesn’t know for certain that Williams is behind the legislation. “I would have to say it would make sense being what we just went through as a school district with regards to the Development Authority and the John Williams project, so that would make sense,” she said. “I don’t know it to be sure, but it’s worrisome and because the legislative session is so tight, things are going so fast that I just don’t think it’s been fully vetted.”
Another part of the bill that concerns Tippins is that under existing law, the district attorney is charged with attending the bond validation hearings to make sure that certain guidelines have been met. Beach’s law takes away that responsibility from the district attorney.
“In the absence of the DA being there, you know who makes the case that the conditions have been met? The Development Authority,” Tippins said.
Then there is the change that prohibits a party from appealing the ruling of a Superior Court judge. The bill says the judge is the final adjudication, he said.
Follow the money
Asked where this bill is coming from, Tippins said, “Well, follow the money.”
Had Beach’s bill been in place when the school board challenged John Williams’ project, the school board would have been on much less secure footing in its challenge, Tippins said.
“They could not challenge the office piece because they were challenging it on the grounds that it was specifically prohibited by law currently,” Tippins said. “If you take that current prohibition out of the law that you can’t do offices then they wouldn’t have a specific line-item challenge to it.” Angelucci agrees.
“I think we would not have had as strong a leg to stand on,” she said. “I don’t think that maybe the other side would have withdrawn because the objection was about school districts and their authority being usurped. But if the language of the bill puts certain allowances in like the office projects, if it allows for that then we could not have objected which is what John Williams wanted was the offices plus the apartments, so we would have had, we would not have been able to challenge it and be as secure as we were.” Cobb Development Authority Chairman Clark Hungerford believes Beach’s bill is good legislation that is needed to clarify various issues. “It’s really, as I understand it, kind of a clean-up bill; it’s primarily focused on some things happening in Fulton County, but I think has some benefits state wide and being a little bit more clear at what some of the qualified projects could be going forward,” he said. “I think it’s an OK bill. I think it’s one that should pass.” Hungerford said he was unaware of how Angelucci or Tippins felt about the bill.
“You know, I am for whatever can make our community better,” Hungerford said. “That includes the business, the school system and the community as a whole. I think there is some benefit from looking at ad valorem tax incentives and other incentives to induce growth in this county, not on a carte blanche basis, but I think there are projects that qualify that would be a boon to our community and end up helping the school board in the long run.”
Fearing the removal of accountability
Angelucci said she hopes Cobb’s state legislators vote against the bill. During a recent training session for school board leaders, Angelucci said she found many school board chairs were unaware of how development authorities can waive school district taxes for developers. “You can tell that a lot of school districts had no clue, I mean when I tell you no clue they didn’t even know what a development authority was, and when you consider how many are in the state of Georgia, I don’t know what the number is, but there are eight in Cobb County alone,” Angelucci said. “So because they didn’t know about it, what happens is especially with the rural districts, they’re not aware they can object. Angela Palm and Sis Henry (education lobbyists), they were standing in front of all those school board chairs and superintendents saying we really have to watch this.” Angelucci believes Beach’s legislation is being pushed through before school districts across the state wake up and realize how development authorities can give away future school revenues. “We’re going to have to talk about this on Wednesday,” Angelucci said of the board’s scheduled work session.
State Rep. Matt Dollar (R-east Cobb) said he’s aware of the bill, but hasn’t yet read it.
“I have read the feedback from Tippins and Angelucci on it, and it does concern me,” Dollar said. “I placed a call to Sen. Beach to try to find out what he hopes to accomplish with this bill, and I haven’t heard back from him. I am troubled by the sentiment out there that this bill will take away accountability from the process when many feel that we need some more accountability.”
State Rep. Rich Golick (R-Smyrna) said he’s studying the bill and is not ready to make a comment. Golick said the bill passed out of the House’s Economic Development Committee, but that Ed Lindsey had requested on Monday that it return to that committee, “so it could very well change.”
Click here to read the bill