The school board’s rare legal challenge of tax breaks Cobb County offered developers appears to have killed a deal to build a $103 million mixed-use project just a mile from the Atlanta Braves stadium site.
The Riverwalk development, which would have included apartments, townhomes and the area’s first office tower in 13 years, was offered the controversial property tax abatement that would have cost the Cobb County School District about $4.3 million over the next decade.
The development was backed by real estate mogul John Williams, founder of Post Properties and one of the most influential developers in the state, with deep connections on the development authority, the chamber of commerce and the county commission. Riverwalk was the first time in Cobb’s history that tax breaks were offered to help a speculative office/residential venture.
The school system, mired in an $80 million budget crisis that has caused teacher layoffs and furloughs in recent years, filed a legal objection to the tax breaks in December and entered into negotiations with the development authority over the past week.
Those negotiations made no progress even after a private closed-door meeting Wednesday that involved Attorney General Sam Olens, former Gov. Roy Barnes, State Sen. Lindsey Tippins and Cobb Commission Chairman Tim Lee, along with members of the school board and development authority.
Also Wednesday, a school board attorney delivered a written settlement offer to the development authority. The school board wanted future abatement deals either to be approved by the board, or, on deals it does not approve, for the schools to receive payments from the developer in an amount equal to the tax being abated.
The developers withdrew their request for the tax breaks — which Williams has said were absolutely necessary for the project to proceed — Thursday morning.
“We are very disappointed,” says a statement handed out by Tad Leithead, a consultant for Williams who also is chairman of the Cumberland Community Improvement District, a collection of influential businesses surrounding the proposed development.
The statement says the developers will “look to alternatives, which would include selling the property or developing it with less investment and no office building.”
Randy Scamihorn, vice-chairman of the Cobb School Board, said it wants assurance that the school system’s financial needs would be considered in future deals.
“We weren’t trying to be vindictive or malicious,” Scamihorn said. “We were just trying to defend our interests as duly elected officials. I didn’t view this as a win or lose issue. I view it as a process for trying to improve how we do business.”
The settlement offer also asks for a new tax abatement policy that would have to be approved by the school board, county commission and development authority.
That policy “should include a process that incorporates a reasonable and objective analysis of the costs (including the abatement) and benefits of each future project,” the letter says. “A formal analysis of each future project should be conducted by the (development authority) and made part of the public record.”
It adds that several factors should be part of the analysis, including: the number of jobs created; the average pay of those jobs; the value of the property; the sales tax generated; the increase in government services required by the development; and the environmental impact of the company receiving the abatement.
The development authority does not have any minimum requirements, for either investment or the number of jobs created, for developers to qualify for abatements.
Cobb Commissioner Bob Ott, whose district includes Cumberland, said seven acres so close to the future Braves stadium site doesn’t need tax breaks to lure a developer. “Any piece of land in that area will have interest,” he said.
But Clark Hungerford, chairman of Cobb’s development authority, said Riverwalk would have generated $3 million for Cobb schools during the 10-year abatement, revenue the district will not receive if the property remains undeveloped.
“In this case, the Cobb County School District took a position to stop this project because they did not like how the existing procedures were used,” Hungerford said. “The winners in this quest need to be the children of Cobb County. In this instance, they are the losers.”