MARIETTA - Following a contentious debate among the Cobb School Board and developers, the company behind a $103 million mixed-use development has withdrawn its application for a lucrative tax break.
The move occurred last month, shortly before a court hearing was scheduled to take place to validate bonds financing a property tax abatement, the Development Authority of Cobb County said the developer of the planned Riverwalk project withdrew his application.
The project, backed by real estate developer John Williams and overseen by his consultant, Tad Leithead, had been approved for 250 apartment units and a 10-story office tower.
But developers soon found themselves at the center of a controversy over incentives: When are tax breaks appropriate, how should they be doled out and who should control who qualifies for them? Should these lucrative deals be handed out solely by an unelected board such as the Development Authority, or should the elected county Board of Commissioners have final say?
These are all questions that remain to be answered in the aftermath of the recent news Leithead had withdrawn his application for Riverwalk incentives.
Though Riverwalk didn't meet Cobb's criteria to qualify for incentives, which includes creating 25 jobs and contributing $500,000 to the tax base, the Development Authority of Cobb County offered Riverwalk a 10-year graduated tax break much to the dismay of the school board, which faces a $79 million funding shortfall.
"This project would have provided over $3 million in additional property tax revenue to the district over 10 years, which would assist in helping resolve budget shortfalls. The winner of this quest needs to be the children of Cobb County; in this instance, they are losers," said banker Clark Hungerford, chairman of the Development Authority, regarding the prepared statement.
School officials rejected offer
Hungerford accused the school board of not giving a response to the Authority's offer until the "eleventh hour."
Instead of taking the Development Authority's offer the school board requested the application be withdrawn and the county draw up a new policy on tax incentives - one that presumably gives equal say to the Cobb Board of Commissioners, the Development Authority and the school board.
School officials say problem not solved
Hungerford said in the statement the project would have helped jumpstart development in Cobb following the Great Recession and help the school board overcome its budgetary woes.
Tax abatement is just one tool, Hungerford said, that can be used to attract projects, but it can also be used against Cobb if the county does not remain competitive.
Hungerford shifted the focus toward the school board saying the Development Authority had "numerous meetings" over the past two months attempting to resolve concerns.
School board member David Banks said there's "no malice whatsoever" but legislation is likely needed to ensure the county's schools have a say when tax breaks are up for grabs that cost the schools revenue.
"This would have probably been a non-event if the school board had proper representation on that Authority," Banks said.
School officials aren't against the project, Banks maintained, but the school district's taxing authority is in jeopardy and they don't take that lightly.
Withdrawing its request for tax abatement doesn't solve the underlying issue, Banks argued.
Future of development unclear
No school board members or developers appeared in court when Cobb Superior Court Senior Judge Michael Stoddard was scheduled to hear arguments.
Because the developer requested to withdraw its application, Cobb District Attorney Vic Reynolds said the case would be dismissed. The district attorney's office steps in with every bond validation, regardless of why a bond is sought.
Tad Leithead, consultant for Riverwalk, handed a prepared statement to members of the media after the 10-minute hearing on behalf of Riverview Office LLC. He declined to answer questions.
Leithead also serves as the chairman of the Cumberland Community Improvement District, where the proposed Riverwalk site is located. The CID was founded by Williams.
The statement said the company had "no choice but to withdraw our application for incentives which were granted to us by the Cobb Commission, the Cobb County Development Authority, and the Cobb Board of Assessors."
The Cobb Board of Commissioners did not grant incentives for the project because it failed to create the needed jobs, but Chairman Tim Lee encouraged the company to seek tax abatement through the Development Authority.
"We relied on that commitment and bought the land and spent millions of dollars in planning the development with the intent of developing a magnificent project at the gateway to Cobb County" Leithead's statement said.
He went on to say the company "attempted several times to settle the matter with the school board, but were not successful."
The future of the 7-acre tract in Cumberland is now uncertain.
"We will look to alternatives, which would include selling the property or developing it with less investment and no office building" Leithead said. The latter option would mean going forward with the planned 250 apartment units.
Supporters had hailed the project as a boon for Cobb because the proposed office tower would be the first "Class A" luxury office building to come to the county in more than 12 years.