In a unanimous decision, the Georgia Supreme Court ruled the Development Authority of Cobb County can issue $35 million in revenue bonds for a new Kroger in east Cobb near the intersection of Powers Ferry and Terrell Mill roads.
The ruling was called a “landmark decision” that will “have a monumental effect on Development Authority jurisprudence in Georgia” by Taylor Morison, director of policy and government affairs for metro Atlanta’s Council for Quality Growth.
The ruling will have an immediate impact on east Cobb’s Marketplace Terrell Mill, an estimated $120 million, 24-acre mixed-use development anchored by the grocery store. The project will also include 298 apartment units, a 100,000-square-foot storage facility, four restaurant and retail outparcels and about 13,000 square feet of shops.
Under the plan, which was approved last year, the development authority will take the title to the property, removing it from the tax rolls. Kroger will pay no taxes on the improved property during the first year, with payment increasing each year until it reached 100% after 11 years.
East Cobb activist Larry Savage issued a legal challenge against the authority, and Cobb Superior Court Senior Judge Adele Grubbs sided with him in September, denying validation for the bonds.
On Monday, the court found that Grubbs erred in her judgement, and a big part of the discord comes from the interpretation of the word “essential.”
According to the opinion written by Justice Keith Blackwell, the lower court interpreted state code such that a development authority can finance a project only to the extent that it is “essential” to “the development of trade, commerce, industry, and employment opportunities.”
But the justices disagreed, ruling that the projects funded by a development authority do not need to be “essential.”
“But nothing in (the state code section) requires that an eligible project be ‘essential’ to such development. … To say that ‘the development of trade, commerce, industry, and employment opportunities’ is an ‘essential’ purpose of development authorities is not to say that anything financed by a development authority must be ‘essential to such development,’” the opinion says.
Clark Hungerford, chairman of the Development Authority of Cobb County, said the ruling is a win for the authority, but will not change the way they do business.
“I think it just confirms our understanding of what’s permitted under (the code section),” he said. “It really doesn’t change what we’ll be doing. We will continue to approve projects that enhance economic opportunity in Cobb County.”
Savage said he believes this ruling leaves development authorities in Georgia free to dole out tax abatements without oversight.
“It’s unfair,” he said. “I think it’s unfair for everyone because we’re left with a blank slate for the development authority. They can give tax abatements to anybody they want to give them to under any circumstances.”
Savage also said he thinks the high court gave short shrift to his primary argument, that the state constitution requires “uniformity of taxation,” and that development authorities violate that provision.
Savage indicated that he believes the fight is over.
“I will not nit-pick this any further, not because there are no nits to pick but because there is no point to doing so,” he said. “The Development Authority of Cobb County, and all development authorities in the state, are now free to use their unrestricted discretion in awarding tax abatement deals to any and all projects that suit their pleasure. ‘Uniformity in taxation’ is toast.”