About Buckhead reporter. (Sandy Springs, GA) 2007-current | View Entire Issue (March 2, 2020)
14 | Community Facebook.com/TheReporterNewspapers ■ twitter.com/Reporter_News In tax-break debates, turf wars arise between local and county authorities BY JOHN RUCH AND DYANA BAGBY Tax breaks granted to developers by bodies called development authori ties are under growing scrutiny in met ro Atlanta’s hot real estate market. But behind the issue of when to grant tax breaks is another question: Who should grant them in local cities - local author ities or their county versions? And what happens when one says no to a develop er and the other says yes? The Development Authority of Ful ton County is facing a call from Atlan ta’s authority to stay out of its turf and state legislation that would bar the DAFC from operating within cities with out local government approval. The de velopment authori ty in DeKalb County, known as Decide DeKalb, has better re lationships with lo cal cities now, but four years ago stirred con troversy with the city of Brookhaven for lack of notice on major tax abatements that hit its budget unexpectedly. “It is not in the in terest of a city’s resi dents to allow devel opers to play a county development authori ty off against that city’s development authori ty for tax breaks. That is what happens now,” said Julian Bene, a critic of tax breaks and a former board member of Invest Atlanta, that city’s development author ity. “A city development authority tends to be more accountable and responsive to the needs of its residents and protec tive of their tax burden.” Leaders of the county authorities dis agree. “Overall, DAFC serves an extreme ly important purpose in Fulton Coun ty, as its focus is on economic develop ment that benefits Fulton County as a whole and the needs of all of its resi dents and not just those in one particu lar municipality in isolation,” said DAFC Executive Director A1 Nash in an email. “We always look forward to solidifying and strengthening our partnership with the municipalities to ensure economic development continues within Fulton County.” “We are extremely intentional to co ordinate with cities,” said Dorian De- Barr, the interim president of Decide DeKalb. “[We] don’t want developers to game the system.” But the details of county authori ty tax breaks can be opaque. Only last year, after decades in operation, did the DAFC start publicly releasing the esti mated value of the tax abatements it provides. For years its agendas did not even list the location of many projects. Decide DeKalb cut one tax-abatement deal in a local city last year that it refus es to divulge. “We do work for the pub lic but some companies don’t want to be named until they announce,” said De- Barr. Both county authorities say they make deals that “create” - often mean ing relocate -- jobs, and in DAFC’s case, some affordable housing units. But they lack mechanisms to confirm that those goals are met and there appear to be no way for the authorities to get full taxes paid if the developers don’t hold up their end of the bargain. In contrast, city de velopment authori ties in Brookhaven and Sandy Springs have created “payment in lieu of taxes” agree ments that get some of the abated money back for city purposes, such as building new streets or acquiring land for city facilities. Citizens may not be aware of the tax breaks, or have difficul ty in discovering why a particular authority granted them. Sandy Springs in recent years promoted the develop ment of a new down town area with luxury apartment com plexes that have been both lauded as modern and criticized as traffic-genera tors. Of five new apartment complexes, four have received tax abatements - two from the city and two from the county. Tax break powers Development authorities are govern ment-created, but independently oper ating and self-funding, bodies that can offer incentives and property tax abate ments in a variety of ways. Fulton and DeKalb counties have development au thorities, as do many local cities, includ ing Atlanta, Sandy Springs, Dunwoody and Brookhaven. A powerful deal-mak ing ability authorities wield is to issue bonds on behalf of a developer, using its tax-exempt status to grant a partial property tax abatement for a period of time, usually 10 years. The general ra tionale is to promote economic develop ment. The DAFC has been targeted with criticism for years for granting abate ment deals on luxury projects in such hot markets as Buckhead and Midtown, where there appears to be little need to spur economic activity. Atlanta Public Schools Superintendent Meria Carstar- phen, herself a former DAFC board member, is a fierce critic of such deals, with the controversy ballooning to ma jor proportions again over the past two years. Carstarphen has said various tax breaks cost her system tens of millions of dollars in lost revenue each year. In fiscal year 2019, the Fulton Coun ty School System lost $6.2 million in “potential revenue” from various abate ments and incentives, and $4.8 million in fiscal 2018, according to Chief Finan cial Officer Marvin Dereef. In 2019, the DeKalb County School District lost $3-9 million to tax abatements, according to interim Chief Financial Officer Robert Morales. The county authorities say that the developments they assist boost the tax base enormously. Critics argue that many of the developments would have happened anyway, so the abatements are giveaways of money. Brookhaven and Dunwoody have good relationship and communications with Decide DeKalb, according to city spokespersons. And in Sandy Springs, Mayor Rusty Paul, a professional mar keter and lobbyist, has had the DAFC as a client for about 15 years. He said that when the DAFC contacts city govern ment, it does so through the city man ager in a process that does not involve the mayor. Turf wars Relationships are more strained in the Atlanta area, where the DAFC cuts far more local tax abatement deals than Decide DeKalb does. Last year, Invest Atlanta’s president and CEO, Dr. Eloisa Klementich, sent Nash a letter asking DAFC to stop cut ting bond-based tax abatement deals within the city limits. She questioned the legality of such deals; said her board is more representative of local taxing ju risdictions; and noted a divergence in the two authorities’ policies on afford able housing. She also raised the issue of “perspective” from the local point of view. “We think it is essential to be at the table for the conversation and the future development in the city,” she wrote. The recently incorporated city of South Fulton was the scene of another tax abatement dispute last year. Major controversy erupted over whether the local government’s authori ty or the DAFC should grant a tax break for a major commercial project. Con troversy within the city government dragged on for weeks, as the Atlanta Journal-Constitution reported, at one point threatening to remove South Ful ton Mayor Bill Edwards and a City Coun cil member from office. As a result, a state legislator has filed a bill that would bar the DAFC from granting such breaks within cities with out the approval of local governments and school boards. State Rep. Derrick Jackson (D-Tyrone) said he filed House Bill 986 to promote conversations between the DAFC and lo cal leaders. “You would think that would happen naturally, but unfortunately it did not,” he said. “... The whole goal is to make sure development authorities touch base with local municipalities.” Paul, the DAFC lobbyist, said before the bill’s filing that he was aware of its general approach. He called it “more punitive than poli cy-setting. It singles out DAFC and leaves the other development authorities oper ating in the county out of the proposed regulation.” Paul said he understands the intent was to “start a conversation about the relationships among the cit ies and the two school boards [in Fulton and Atlanta], That discussion is healthy and I look forward to it.” One provision of Jackson’s legisla tion would bar an elected official from chairing a development authority, to avoid what he called “tension and con fusion” about political roles. But lo cal input is his main goal, he said. The bill would bar the DAFC from acquiring property, granting any tax abatements or “undertak[ing] any project” within cities without the “approval” of the lo cal board of education and the city gov ernment. “Although it’s great the county can come in... the county may not be famil iar with their comprehensive plan, the land use, just the whole arch of having a particular vision for that city,” Jackson said. Nash said that DAFC’s perspective has its own advantages. “The need to have a development authority that crosses city lines and takes into consideration Ful ton County as a whole cannot be over stated,” he said. “People oftentimes re side in one part of Fulton County and work in another part. In addition, pro posed projects may be located in mul tiple cities [or] jurisdictions, which is something DAFC is well-equipped to handle and has done so in the past.” Jackson noted that abatements can affect local governments and school system revenues, where people have elected representatives to oversee the operations. “Keep responsibility and ac countability where they belong,” he said. LOCAL PROJECTS WITH TAX ABATEMENTS A full list of over 30 projects can be found online at ReporterNewspapers. net SPECIAL State Rep. Derrick Jackson. BH
