As Cobb County secretly negotiated a blockbuster deal to partially fund the building of a new Atlanta Braves stadium, officials also were bargaining with taxpayer dollars to win over other businesses.
The confluence of these events has observers wondering if Georgia’s third-largest county has set precedent for itself — and possibly its neighbors — that could cost taxpayers more in incentives in future economic development negotiations.
The county has been in talks to keep The Weather Channel from leaving the area, and Cobb’s development authority has teed up potentially $4 million in property tax breaks over 10 years for developer Greenstone Properties to build a mixed-use complex. The complex would have an office building with an apartment company run by well-connected real estate tycoon John Williams as its lead tenant.
The bargaining for tax breaks come at a time when Cobb schools have battled persistent budget shortfalls because of waning property values and a cut in the amount schools receive from the state.
“Once you indicate you’re willing to negotiate, I think that does open you up,” said Kennesaw State University economist J.C. Bradbury.
Tim Lee, the Cobb commission chairman who negotiated the $300 million public contribution toward the Braves stadium, said Cobb has used incentives to attract business for years. The Braves deal is one of the largest in the county’s history.
“We’ve had many asks by companies, big and small,” he said. “We deal with each independently.”
The Weather Channel, a mainstay near Cumberland Mall since 1996, is seeking an unknown amount of tax incentives, grants and other perks in exchange for retaining its Cobb address and following through with a planned expansion that is expected to add 200 new jobs.
Officials there balked at an initial county offer of a $50,000 grant and $140,000 per year in property tax abatements. The Weather Channel employs about 700 people at its Cobb County headquarters. If it adds 200 jobs, The Weather Channel could be eligible for about $1.25 million in state jobs tax credits over five years, based on state formulas.
Kathy Angell, a senior vice president at The Weather Channel, sent an email to Brooks Mathis, vice president of economic development at Cobb’s Chamber of Commerce, complaining that the county didn’t offer enough incentives. Mathis has told county leaders that the planned expansion is worth $90 million.
“To be honest with you (off the record) none of these discussion(s) have really provided us with any type of compelling incentives for us to stay in Cobb County. I am just being honest here,” Angell wrote in the Nov. 1 email.
There does not appear to be any links between the incentive requests, other than they are happening at the same time. The Braves deal and the ongoing talks with The Weather Channel have been handled in private. The property tax break for Greenstone is a first-of-its-type use by Cobb of a common recruitment perk that other metro communities have offered developers.
“Where’s ours?”
Cobb Commissioners approved the Braves deal by a 4-1 vote last month. The cost to taxpayers will be $572 million over three decades including principal, interest and money set aside for capital improvements.
But Cobb leaders contend the Braves will put the county on the map in a way no other project has since Lockheed Martin opened decades ago. And, they argue, the accompanying $400 million mixed-use development planned by the Braves will bring new life to the Cumberland/Galleria area.
Weather Channel spokeswoman Shirley Powell said the company plans to expand its newsroom and studios and a major parking structure to relieve an already congested parking situation. Its negotiations with the county started before the Braves’ deal became public.
Powell said the company is “happy doing business” in Cobb County, but “given our future growth, to stay in our current location requires significant levels of investment.” She said they want the county to “support” that investment “as they do many other businesses.”
Angell, the Weather Channel executive, put a finer point on it in her Nov. 1 email to Mathis: “Our senior management feels that they would be making a significant investment to stay here and as far as I know, The Weather Channel has never historically asked for any incentives from Cobb County.”
Bradbury, the KSU economist, said the broadcaster has leverage in that it is a nationally known brand and long-time corporate citizen.
“That’s the danger with tax breaks — once you start using them, everybody wants one,” Bradbury said. “They’re saying: ‘Hey, we came here, and we didn’t get anything. Where’s ours?’”
‘An even playing field’
Greenstone, a Cobb-based developer, plans a $103 million mixed-use campus now called Encore Center that will include a 10-story office tower and at least 250 rental units and some retail.
The new office building could be the first significant addition of high-end office in Cobb in more than 15 years by the time it’s finished, developers said.
Cobb has missed out on several business relocation prospects because its offerings of high-end, “Class-A” office space are older, said Nelson Geter, the executive director of the Development Authority of Cobb County.
“As a result, we’ve lost some of our competitiveness in terms of bringing new (prospects) to our county,” he said. The tax abatement for this mixed-use development will fast-track new office space and help the county recruit companies, Geter said.
Geter said Cobb has never provided tax abatements for a project like this. Such tax benefits in many counties are often offered to major economic development prospects like manufacturers.
Development authorities in Fulton and Atlanta have used these incentives to help attract new high-rise, mixed-use developments over the past several years. Geter said the project could create about 400 jobs, of which nearly 300 will be new to the county.
But it is likely to be the tenants themselves that create jobs or move them from other competing developments.
The first tenant could be Preferred Apartment Communities, a company founded by Williams, the Atlanta apartment king and co-founder of Post Properties. PAC provided Greenstone a loan to acquire the seven-acre site at I-75 and Cumberland Boulevard and is negotiating a lease, said Chris Scott, the Greenstone executive.
Scott said Greenstone will pass the tax savings on to tenants, keeping rents competitive with nearby buildings. Though the county will take a hit on the front end, he said, the incentive will help expand the tax base.
Randy Scamihorn, chairman of the Cobb school board, said he wasn’t informed in advance of the deal with Greenstone. He said he’s not necessarily opposed to the project, but the school system has cash flow issues now, with a projected shortfall of $79 million for the 2014-15 school year.
“I’m pro-business; without business we do not have a thriving economy,” Scamihorn said. “Everyone wants an even playing field, whether it’s The Weather Channel or the school board or anyone else.
“My opinion is: Where do you draw the line?” he said.
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