Around Town: New deal for Galleria area a home run...but not for taxpayers
by Joe Kirby, Otis A. Brumby III and Lee B. Garrett, - Around Town Columnists
December 03, 2013 08:29 AM | 7003 views | 22 22 comments | 119 119 recommendations | email to a friend | print
COBB COUNTY just agreed to issue $367 million in revenue bonds to help build a stadium for The Atlanta Braves to call home. But does it now need to start handing out unneeded tax incentives that don’t expand the tax base and will result in additional multi-family housing? Yes — at least according to those who run The Development Authority of Cobb County. On Nov. 15, four days after the seismic announcement that the Braves would be moving to Cobb, the Authority agreed to tax incentives worth millions of dollars, requested by one of the metro area’s bestknown and best-connected builders, for a $103 million mega development barely a mile from the new stadium. The new deal is a home run — but not necessarily for the taxpayer. 
 
MOST TIMES when a company announces a $100 million development that will mean more than 400 jobs for a community, the ballyhoo is deafening.
 
Not so, though, in the case of the mega development planned by local real estate mogul John Williams, co-founder of the Post Properties empire. Williams (who parted ways with Post years ago) wants to build a 10-story office tower, 14 three-story townhomes and 236 condos on a seven-acre site at the intersection of Cobb Galleria Parkway and Cumberland Boulevard. The working name for the development is “Riverwalk.”
 
The project is being shepherded through the incentive process by consultant and Cumberland CID Chairman Tad Leithead. 
 
So why the silence from all concerned? The most likely answer is that Williams is on the verge of capturing millions of dollars in local tax abatements, courtesy of the Development Authority of Cobb County. His company would pay no additional property taxes on the proposed $103 million development during its first year, then just 10 percent the second year, 20 percent in the third year, and so on until the payments catch all the way up with the full taxable value in its 11th year.
 
Neither Williams nor the Riverview Office LLC he heads have spoken publicly about the proposal. Likewise, as of press time on Monday, there was no mention of the tax waivers on the Development Authority’s website — even though it prominently lists other Cobb “News and Deals,” most of them considerably smaller.
 
THE AUTHORITY unanimously approved the waivers at its meeting Nov. 15. Voting for the proposal were Chairman Al Searcy and members Clark Hungerford, Robert Morgan, Donna Rowe, Richard Moore, Karen Hallacy and Blake Kenya. 
 
But the county’s Economic Incentives Review Committee analyzed “Riverwalk” and found it did not meet the criteria for the incentives, as Commission Chairman Tim Lee told Williams by letter on Nov. 18.
 
The county considered the office and residential components of Williams’ request separately, as required under its newly adopted incentives framework. According to documents filed with the Cobb Tax Assessors by Williams’ project consultant Tad Leithead, the multi-family portion, worth roughly $40 million, would only create five jobs. County officials told MDJ reporters that the multi-family portion of the project did not meet the County guideline minimums of 25 jobs and $500,000 contributed to the tax digest and so was turned down.
 
In the past, the Authority has acquiesced to the quiet desire of the chairman of the Cobb Board of Commissioners on such tax incentives. But in this case, the Authority approved Williams’ request and ignored Chairman Lee. Development Authority Executive Director Nelson Geter said the Authority took the opposite approach and lumped the impact of Williams’ residential and office developments together rather than considering them separately. As Geter stated to the MDJ, the project is “an exception to the rule.”
 
The abatement request next moves to the Cobb Board of Tax Assessors, which is slated to vote on the values of the properties involved (essentially a formality) at its meeting on Wednesday. Finally, the bonds must be validated by Cobb Superior court in a hearing set for later this month. 
 
EYE-POPPING to many who’ve heard about the deal is the fact that the Cobb Development Authority is offering tax incentives for a multi-family development — aka apartments. Not only that, it is in the highrent district in the Cumberland CID.
 
Numerous other questions arise in the wake of Williams’ request.
 
How does building an office park and multi-family housing translate to the creation of the touted 400 jobs? Only a handful would be created by the residential component once construction was complete. As for the rest, Williams would not be creating jobs — merely building office space for other companies to hopefully occupy and create jobs. Sources tell Around Town that Williams plans to partly fill the tower by moving some of his existing operations into it. Williams is no doubt hoping to lure other Cobb companies into his new space. There obviously would be no net gain for Cobb from such shifts. Rather, Williams would be benefitting from what amounts to taxpayer-subsidized rent for his company. And thanks to taxpayers, he also would be able to charge cheaper rent to his tenants than his competitors would be charging. 
 
THERE’S ALSO the question of when, if ever, Cobb has used tax incentives to build multi-family housing. In some of its blighted or environmentally challenged areas, perhaps. But the Galleria area, aka “The Platinum Triangle,” is anything but blighted.
 
As with the office component of the proposal, the tax subsidy would give Williams a sizeable advantage over his competitors.
 
And not to mention, Williams’ residential units would not feel the full effect of the 3 mill increase the self-taxing Cumberland Community Improvement District plans to levy on apartments in its district in order to help pay for the new stadium for the Atlanta Braves for the first 10 years. 
 
YET WILLIAMS is still on track to get his desired abatements and knows which strings to pull. He has long ties in the Cumberland/ Galleria area, having played key roles in the decisions to build the $48 million Cobb Galleria Centre convention center and then the $150 million Cobb Energy Performing Arts Centre, whose main theater bears his name. He’s also a former chairman of the Cumberland CID, the Cobb Visitors Bureau, the Cobb Chamber of Commerce and the Cobb/Marietta Coliseum and Exhibit Hall Authority. He’s been responsible for the development more than $5 billion in private real estate during his career, much of it within easy walking distance of the site on which he proposes to build the Riverwalk project.
 
It looks like Williams will get his desired incentives even after Lee has said no. Who else can get such sweetheart deals? Shouldn’t elected commissioners have the final say over such incentives, not the Authority? And shouldn’t the Commission’s role be to provide oversight over the Authority?
 
YOU’LL REMEMBER that the rule of thumb for whether Tax Allocation District subsidies were needed was the “but for” test: That is, the project would never be able to attract a developer “but for” the subsidy. The “but for” test also can be used to determine the necessity of the tax incentives the Authority hands out. And Williams’ requested subsidy for multi-family fails that test.
 
CID Chairman Leithead — who until recently chaired the Atlanta Regional Commission and who Williams has hired as his consultant on the Riverwalk project — boasted to the commission last week that the CID was responsible for 33 percent of Cobb’s economy and 5 percent of the Georgia economy. We don’t doubt that’s true. But it kicks the chair out from under his client’s argument that tax incentives are needed in order to draw more business.
 
By ignoring the standard county criteria and handing Williams the incentives he asked for, an unelected development authority board has set a precedent and done so without expanding its tax base. Will future developers with less influence be granted the same treatment by the development authority?
 
We have little doubt that the Galleria area will be “red hot” in development terms for years to come, thanks to the magnetic presence there of the Braves. And with that in mind, it’s hard to see any need for such tax incentives — especially those used for multifamily housing.
 
 
Comments
(22)
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Dirk Bodkin
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December 03, 2013
This happened because the appointed Authority has the ability to take care of their bedfellows. Vote against every Cobb delegation member who does not vote in this upcoming session to strip the Authority of this power.
Recall Lee
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December 03, 2013
Folks, this is vintage Timmy Lee!!! He maneuvers these deals in the dark, then announces them in the light, to the public!!! Timmy Lee is absolutely evil!!! We need to recall Tim Lee and not get Joann Birrell and Helen Goreham re-elected. These are nothing more than "guaranteed Tim Lee stamps"!!! Joann doesn't have the brain God gave a mule. Helen quit representing her constituents a long time ago, when she was bribed by Tim Lee for her cooperation.
casual observer
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December 06, 2013
"Bribe" is a big word. Best be careful with your vocabulary - some things you say may not stand up to staying anonymous. Tread lightly...
Always shady
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December 03, 2013
It is sad that the commissioners promised this would bring a new tax base and more money for CC just a week ago. Now we find out that Williams big development will bring nothing to CC and probably hurt CC. People asked for this not to be rushed through.
ViningsSpeaks
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December 03, 2013
Why is Karen Hallacy, who's been lobbying Cobb PTAs to support a tax increases on seniors to get more money for Cobb schools, voting in favor of eliminating taxes on a development that will contribute to school overcrowding and more transient students in the schools that serve this area? Why is an unelected board given the authority to approve this kind of massive giveaway? And how long before the Braves and the Pope and Land development decide they want the same kind of giveaway? Doesn't the Commission have veto power over issuing these bonds? This is truly outrageous.
Cumberland CID Local
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December 03, 2013
Riverwalk is already the name of a large residential complex less than 2 miles away (built by Ashton Woods in Wildwood office park 2004-2012).
COBB CSI
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December 03, 2013
Looks like Salis Marner AKA John Williams won’t be pulling his fair share of taxes to help with the Braves. I’m sure Timmy Lee RINO Republican helped make sure this happened. RECALL LEE
anonymous
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December 03, 2013
I agree. My first thought was that Lee and the Authority planned this. Lee would be able to look like a non-crony (which he is NOT) and his buddy Williams still gets what Lee and the other cobb big biz cronies want him to get. And then all the cronys look to the non-elected authority and say "oh, well" "they (pointing to the authority) did it". "Don't blame me".

Cobb County = BIG Crony Capitalism .

Cobb County = Rigged Game.

Read article first
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December 03, 2013
Did you read the article or are you just mad that Lee pulled off the Braves deal? Lee is opposed to the development CSI!
anonymous
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December 04, 2013
Dear Read Article First, since you did not grasp the import of my comments, be advised that I believe any statements/actions which make it appear that Tim Lee is against this taxpayer funded bout of "welfare for the well heeled", is a SHAM...designed expressly to give Tim lee the appearance of not handing out millions to crony buddies.

Go back and tell your chamber cronies that the SHAM ain't workin'
Native 30067
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December 03, 2013
THIS is why Cobb County doesn't have the scandals found in other metro counties - the MDJ is on the lookout and knows the difference between a good deal for taxpayers (Braves) and a raw deal for taxpayers (this project).

Williams deserves credit (and favorable status) for his role in developing the Cumberland area. But this is not a high-impact project. Go back to the drawing board, up the ante, then come back and get the tax breaks.
Just Wait
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December 03, 2013
This is obviously a Board appointed by Republicans that only desire to help other Republicans make even more money at the expense of ALL Cobb tax payers.
anonymous
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December 03, 2013
Just wait, it's a board full of RINOS.

RINOS are all about crony capitalism.

RINOS are indistinguishable from democrats in terms of their appetite for taxpayer money and love of big government.
Ex Smyrna Resident
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December 03, 2013
I think it will be great for Cobb. We moved because the area had become run down and most businesses and retailers had left. That area needed something and this is it!
East Cobb Senior
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December 03, 2013
Thank you MDJ for exposing this "boondoggle". Unfortunately these "tax incentives" also apply to the school tax. With looming massive deficits in our Cobb County School System, it is beyond reason or comprehension that the Development Authority would grant, these unwarranted and unjustified "TAX PERKS" for this project. Shame on all the members of the Development Authority who voted for this give-away and ignoring the plight of our childrens education and compromising the Quality of Education they expect and demand.
@ John Willams
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December 03, 2013
At a time when the Cobb school district is projecting an $80 million shortfall, you seek property tax relief ??????

Shameful !

Your timing on this request is also suspect.

Timing as you know is everything just like your market misstep on The Mansion in Buckhead.
Just Wait
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December 03, 2013
The Commission has nothing to do with the part of property tax that goes to the schools. Please make a note of this.
@ Just Wait
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December 03, 2013
Your right about the different buckets, Commission versus School.

However, the property tax abatement applies to both the Commission and to the School property tax.
Craig Kootsillas
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December 03, 2013
Thank you for publishing this.
Greg in Smyrna
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December 03, 2013
Multifamily != Apartments. Based on what you wrote earlier in the piece, "multifamily" in this case means 14 townhouses and 236 condos. That kind of high-density housing is appropriate for the area.

A temporary tax abatement for a large new development to get up to speed can make sense, but eleven years seems excessive.
Readmo Paper
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December 03, 2013
Tax breaks are supposed to be INCENTIVES to persuade companies to locate in Cobb and make investments and create jobs. This is a big investment but not so good for permanent jobs, Why would Cobb give incentives to "attract" a developer to develop property he already owns in Cobb?? The taxpayers have done far more than most people realize for the Cumberland area. Asking for tax breaks is a bit much.
Butler Reynolds
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December 03, 2013
This is why government just doesn't work. There is no place for government in trying to revitalize or promote growth in certain areas. If it gets in to that mode you then start seeing special favors and exceptions like this and the Braves stadium.

It is a slippery slope. Cobb long ago slipped and the cronyism is only accelerating.

Instead, government should only make rules that apply equally to all taxpayers and businesses. This way the incetive is to make Cobb a great place to do business for any sized operation -- not just a chosen few. It also makes the entire county attractive to live and work -- not just certain areas of town with well connected interests.
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