A bill that could enable more hotels and offices to qualify for property tax abatements has reignited debate over the impact of incentives on school tax revenue.
Senate Bill 353, introduced by Sen. Brandon Beach, R-Alpharetta, who heads the Greater North Fulton Chamber of Commerce, tackles a variety of public finance laws in one fell swoop. Among the changes, the legislation proposes amending the law to excuse what many bond lawyers agree is a formality: a district attorney’s presence at bond validation hearings.
Critics say a DA’s role is to represent the interests of the local government. They’re more concerned, however, that the bill clears the way for more hotels and offices to get property tax abatements through local development authorities — a move that could cut tax revenue to schools.
“You can’t continue to extend property tax exemptions on a wholesale basis and not undermine the school system,” said Sen. Lindsey Tippins, R-Marietta, a former Cobb County school board member who has opposed the bill. The bill, passed by the Senate and a House committee, was returned to the committee this week and may not make it out this session.
Tax incentives are widely used across Georgia. The Development Authority of Fulton County, in particular, has awarded tax incentives for several projects in Buckhead, Sandy Springs and North Fulton.
Critics say the incentives harm school systems, which rely on property tax revenue for operations. Earlier this year the Cobb County school board won a rare challenge against tax breaks offered to developer John Williams to build a project near the future Atlanta Braves stadium site. The development would have cost the Cobb County School District about $4.3 million over the next decade.
Both SB 353 supporters — namely the Development Authority of Fulton County — and critics agree the legislation would weaken grounds for appeal that can be filed against a project, efforts that can tie up a project’s financing in court for years.
Lewis Horne, a bond attorney for the Fulton authority who drafted the legislation, said the bill attempts to streamline conflicting sections of the code that often result in appeal challenges.
“We spent about a million in defense costs over the past five years, and the same complaints come over and over again and are routinely dismissed by a trial judge,” he said.
For instance, the bill strikes language that prohibits tax incentives to hotels and office space (as well as nursing homes), which supporters say can be justified in a different section of state law.
“We’ve been issuing deals under section N, and ignoring H, and it would be helpful to us if H goes away,” he said.
John Woodham — an Atlanta bond lawyer who has built much of his career on challenging property tax incentives to private enterprise — counters that by deleting that section, the bill limits the grounds on which a tax abatement can be appealed.
Woodham has challenged the Fulton authority on myriad projects, some of which are still tied in court appeals.
The bill comes as metro Atlanta prepares for two major stadium projects intended to spur related development. Horne disputes suggestions that the bill is connected to potential business deals surrounding either the future Atlanta Falcons or Braves stadiums.
“If there was no Falcons stadium or Braves stadium or it was delayed for two years, our bill would have been introduced in the same fashion,” he said. “It’s a result of the scars of five years of litigation and about a million dollars of legal expenses.”
Despite Senate passage, the bill hit a snag when it appeared before the House Rules Committee Monday. House Judiciary Committee Chairman Rich Golick, R-Smyrna, grilled Beach about whether the bill expands taxation exceptions, limits the time in which an appeal can be filed and poses a potential conflict of interest.
Beach said it could allow hotels and motels “to be tax exempt,” and explained that it’s similar to how the Braves’ current stadium deal works. Turner Field is owned by the city of Atlanta and the Atlanta-Fulton County Recreation Authority, which leases the park to the Braves. Nobody pays property taxes on Turner Field, Beach said.
Rep. Ed Lindsey, R-Atlanta, who is sponsoring the bill in the House, motioned to send the bill back to committee, where many believe it’s likely to stay this session.
Horne said the group attempted to pass the bill two years ago, but that it was shelved in favor of more pressing legislation at the time.
The bill faces an uncertain future given that there are only three days left before the session ends. Any changes to the bill would also have to be approved by the Senate.