Little oversight on process for tax incentives
by Nikki Wiley
September 29, 2013 01:50 AM | 3199 views | 1 1 comments | 13 13 recommendations | email to a friend | print
CUMBERLAND — Cobb’s elected leaders have little oversight of the amount of tax incentives developers receive, and critics say the program lacks transparency.

One of metro Atlanta’s most influential developers, John Williams, has applied for abatement of property taxes — a waiver of taxes — and suspensions of permit and license fees on a $100 million development approved for the Cumberland area.

But the decision about incentives will be left in the hands of an appointed board, the county manager and the county chairman without going to a vote by the Board of Commissioners.

The Board of Commissioners approved earlier this month the mega development containing 236 condos, 14 three-story townhomes and a 10-story office building containing 200,000 square feet of space. The 7-acre site is at the intersection of Cobb Galleria Parkway and Cumberland Boulevard.

“Our goal is for this to be the most outstanding office building and mixed-use development in metro Atlanta,” Williams said in an emailed statement.

He did not respond to an email reply seeking comment on the application for tax incentives and could not be reached by phone by press time.

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 is named after him, The John A. Williams Theatre.

His new project, dubbed “Riverwalk,” is anticipated to attract 500 office workers to its office building, said Tad Leithead, chairman of the Cumberland Community Improvement District, which is a self-taxing district that contains the site of the development.

Williams founded the Cumberland CID in 1988.

He isn’t the first to ask for incentives.

Eight companies requested incentives in the last five years. Riverwalk is the first application this year.

Williams is developing Riverwalk under the company name Riverview Office LLC.

Construction could begin soon on Riverwalk with a targeted finishing date of spring 2015. Condos and townhomes will be rented until market conditions trend more toward sales.

Transparency in incentives

Critics argue the process needs more transparency and some say there are situations when tax payers end up paying for the wealthy to become wealthier.

Lance Lamberton, president of the Cobb County Taxpayers Association, called the process of getting tax breaks “moderately” transparent.

“I would prefer that kind of direct oversight by the commissioner,” Lamberton said.

Lamberton advocates for reducing red tape and bureaucratic obstacles and says there are examples of cases where the public saw a benefit because of a project.

Lamberton questions why fees are required if they can be waived.

“You really have to ask yourself, ‘Why are those fees and permits required in the first place?’” he said.

Williams can afford to purchase the property and construct it but wants a tax break, said Ron Sifen of the Cobb County Civic Coalition.

Sifen takes issue with giving perks to “the most rich and powerful resulting in average taxpayers paying more.”

There are reasons why the government might consider incentivizing development, Sifen said, like trying to spur growth in a blighted area.

Sifen wants to know more about what the potential benefit to the public is but is skeptical.

“He wants taxpayers to subsidize him,” Sifen said of Williams. “I have a problem with that.”

Who has the power?

Decision making over tax incentives has long been a confusing process in Cobb County.

Don Wix, the former chairman of the Development Authority of Cobb County, said last year he neither knew nor cared about the size of tax breaks that were handed out by his board.

In 2012, the Development Authority and Board of Commissioners also argued over which agency had the power to grant the incentives.

Ultimately, both have power over different kinds of incentives.

Companies that plan to provide at least 25 jobs and add $500,000 in property value to the county’s tax digest can apply for two types of incentives: property tax abatement and waiving of fees for licenses and permits.

Eligible developers are able to get around paying property taxes by going through the Development Authority. As a governmental agency, the authority does not pay property taxes on any of the land or buildings it owns.

To allow the selected corporation to avoid paying property taxes, the Development Authority will either purchase property and lease it to the company or lease property it already owns. The developer then pays a set amount to the authority, typically stretched over a 10- to 20-year period, until it has paid off the purchase price and assumes ownership.

Once the company assumes ownership it begins paying property taxes on the full fair market value, said Stephen White, chief appraiser for the county.

The Cobb Board of Tax Assessors approves the value of the property, but the authority is able to enter into the agreement on its own without approval of another body.

Authority members are appointed by the Board of Commissioners.

“That is their oversight,” said White. “Say the Development Authority did something that wasn’t appropriate. Then the commissioners would remove those members. There’s oversight through the appointment, but there’s not veto power given directly to those commissioners.”

Commissioner Bob Ott, who represents the Cumberland area, said the commission does get a voice. Commissioners vote to approve the bond that the Development Authority takes out allowing it to lease the property to private developers. The bond is a debt the Development Authority takes on that is repaid, in part or in full, by the lease payments.

Still, Ott argued it wouldn’t be “appropriate” for the commission to decide who is deserving of a tax break.

The story is different, though, for other kinds of fees.

The final decision: Lee and Hankerson

Cobb Chairman Tim Lee and County Manager David Hankerson have final approval over waiving the cost of permits and licenses.

That application goes to the county’s Office of Economic Development where a cost-benefit analysis is done to determine if the project meets the minimum number of jobs created and its economic impact. An internal committee of county employees then meets to make a recommendation to Lee and Hankerson, said Michael Hughes, director of economic development for the county.

Lee also involves the commissioner who represents the area where the development is occurring in the discussion.

The internal committee has requested more information on Williams’ Riverwalk development and hasn’t scheduled its next meeting.

Meetings of the internal committee are not open to the public because they are considered staff meetings.

Lee says he thinks the process businesses go through to get incentives is fair.

The application process was adjusted after Lee took office as chairman to create more clarity about the minimum requirements for eligibility, which is creating 25 jobs and an economic impact to the county tax digest of $500,000.

Lee says the process is transparent and helps the county attract more development.

Still, he says it’s not necessary to bring such matters before the county’s elected representatives on the Board of Commissioners.

“You’ve got to be competitive and sometimes that requires us to be discreet,” Lee said.

Development Authority meetings are open to the public and Nelson Geter, the authority’s executive director, says residents can listen to discussion about incentives at those meetings.

Under Georgia law, governments can go into a closed session to discuss real estate matters however.

Leithead, chairman of the CID, says the Williams’ development will be an “upward boost” for the county.

“In a market like the Cumberland Galleria, when you provide new development, both residential and office, you provide new opportunities for people to relocate to Cobb County,” Leithead said.


Companies that have received incentives in the last five years:

Home Depot of Cumberland

Fed Ex of Kennesaw

Osmotica Pharmaceutical of Marietta

NCR Corp. of Duluth, which has a jet based at the Cobb County Airport-McCollum Field

Cole of Kennesaw

Novelis of Kennesaw

Comments-icon Post a Comment
September 30, 2013
It’s just chamber cronies or corporate welfare you take your pick also go look at the campaign donations and see how the votes went. Wonder if you as a single tax payer trying to rebuild or build new will get a tax break fee waiver for building. After all John Williams has more money than Czar Obama why does he need a tax break?
*We welcome your comments on the stories and issues of the day and seek to provide a forum for the community to voice opinions. All comments are subject to moderator approval before being made visible on the website but are not edited. The use of profanity, obscene and vulgar language, hate speech, and racial slurs is strictly prohibited. Advertisements, promotions, and spam will also be rejected. Please read our terms of service for full guides