Atlanta-based Ichter Thomas LLC was hired by the Development Authority amid a flurry of controversy caused when county schools officials filed an official objection in Cobb Superior Court to a tax break offered by the authority to the developer of a $103 million office tower and apartment complex near the Atlanta Braves stadium property.
The school board objected to the 10-year graduated tax abatement for the project, coined Riverwalk, that included about 250 apartments and a 10-story office tower because they said it would take away needed revenue from a school system already facing a $79 million shortfall.
The project backed by real estate mogul John Williams didn’t meet the county’s criteria for a waiver of permit fees, which requires creating 25 jobs and contributing $500,000 to the tax digest.
A contentious debate and challenge to the bond issuance that would have been used to underwrite the project followed, calling into question who has the authority to give away tax revenue. It also exposed the complicated process of how decisions are made about who gets treated to lucrative tax breaks and who doesn’t.
The Development Authority, the developer’s local consultant Tad Leithead and school board members found themselves in a courtroom several times before developers of Riverwalk ultimately opted to withdraw their application for the tax break.
Clark Hungerford, chairman of the Development Authority, said although the agency retains Dan McRae and Mike Diamond as in-house counsel through Atlanta-based Seyfarth Shaw, a separate law firm was needed to prepare for a trial that never happened.
“I hate that it got portrayed as an ‘us versus them,’” Hungerford said.
The cost was initially estimated to be about $10,000, Hungerford said, but as the dispute escalated and a trial seemed unavoidable, that cost rose to $41,000.
The Development Authority and Riverwalk developers will share that cost, each paying $17,000, Hungerford said, with the remaining amount being written off by the law firm.
Talks with school board ongoing
Still, Hungerford said while the Riverwalk development is no longer being considered for a tax break and the Development Authority continues to have “good dialogue” with school board members, if the issue isn’t resolved work done by the law firm may be used in the future.
“We may pay for something that we may not ever use,” Hungerford said. “However, if we can’t work it out amicably and have to at some point go to trial, all this information that was found, the research and the preparation would be something that we could use at a later time.”
The Development Authority also opted at its Tuesday meeting to table a policy that would make the process of doling out incentives clearer pending more talks with the school board. A major sticking point for school officials was a perceived lack of opportunities to give their input on how school tax revenues are used to lure developments.
In the aftermath of the dispute with the school board, Development Authority member Karen Hallacy offered to step down and let Cobb Commissioner Bob Ott, who appointed her, give the school board a spot on the authority’s board, if he chose to do so.
Hallacy also suggested more research be done into the benefit of offering tax breaks before they are given.
Nelson Geter, who works as an economic development manager for the Cobb Chamber of Commerce as well as the Development Authority’s executive director, told board members Tuesday the University of Georgia Carl Vinson Institute of Government could be hired in the future to do a cost-benefit analysis on projects being considered for incentives.
Geter estimated an analysis would cost between $2,000 and $3,000 based on the size of the project.
Dollar’s bill ‘posturing,’ attorney says
Providing better oversight of the state’s development authorities and their ability to hand out tax breaks has been a priority for some of Cobb’s state lawmakers. Several bills have been introduced into the Georgia Legislature since January addressing the powers of development authorities.
State Rep. Matt Dollar (R-east Cobb) introduced the Development Authority Transparency and Accountability Act in the Legislature in February. Dollar was challenged for his House seat in this year’s Republican primary race by Hallacy, but she has since dropped out of the race.
The measure, House Bill 921, would require development authorities to provide quarterly reports, giving counties, municipalities and local school boards a way to stay informed on upcoming development projects that might get offered special tax deals.
Dan McRae, attorney for the Authority, called it a “posturing kind of bill.”
Dollar also introduced a resolution to create the Development Authority Study Committee, allowing state representatives to study local development authorities and their relationship to other governing bodies and address concerns about accountability.
Before addressing that resolution at the Tuesday meeting, McRae asked if media was in the room. When he was told yes, McRae said the resolution was nothing to worry about.
McRae also said Senate Bill 353, which critics said would grant new powers to authorities, will not go anywhere before the legislative session ends Thursday.
SB 353 is sponsored by Sen. Brandon Beach (R-Alpharetta), who is the 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.
The bill has been denounced by both state Sen. Lindsey Tippins (R-west Cobb) and Cobb Schools Chairwoman Kathy Angelucci, who say it would limit a school district’s ability to challenge special tax breaks offered by development authorities.
McRae called it a “good bill.”