A tax incentive deal for the Atlanta Hawks to build a practice facility in Brookhaven includes a creative wrinkle that has critics questioning whether these kinds of arrangements have gone too far.
What makes this incentive agreement stand out is that, in addition to giving the Hawks tax money, it also funnels money back to Brookhaven's economic development agency, which granted the tax break.
DeKalb Commissioner Jeff Rader calls that payment a “kickback.” Schools Superintendent Steve Green says tax breaks are “out of control.” The DeKalb Commission passed a resolution condemning the deal.
“I call it a kickback just because it transfers revenues from one jurisdiction to another,” Rader said. “There is no free lunch. If you take money through a tax abatement and give it to a city, then that’s taking money away from the school system and the county.”
Brookhaven officials say they will negotiate how to distribute the payment among the city, schools and county. Rader says he’s concerned that cities have found a way to redirect tax break money back to themselves.
Unelected development authority members, who are appointed by city leaders, have the power under state law to grant tax abatements. The Brookhaven Development Authority unanimously approved the tax incentives June 22.
Like many tax breaks, this incentive package gives the Hawks a discount on property taxes, worth $11 million, that would have otherwise gone toward schools and local governments.
But this transaction also includes an annual $302,900 payment from the Hawks to the Brookhaven Development Authority, without any requirement that the money will be shared with the DeKalb school system and county government. The payments add up to $4.5 million over 15 years, reducing the net amount of the tax incentive to $6.5 million.
In return for the tax breaks, the Hawks are investing $36 million in the practice facility at Executive Park near I-85. Emory Healthcare is also building a $14 million sports medicine center at the 90,000-square-foot complex, though that part of the development didn't receive tax benefits. The project will bring an estimated 200 jobs to the city.
Green said the school system should have a voice in the process before tax money for education is taken away.
“To the extent that we have fewer resources, that compromises our ability to accomplish that mission of having our students career, college and military ready,” he said. “It needs to be more highly regulated. It’s out of control right now.”
The chairman of the Brookhaven Development Authority, Luke Anderson, wrote in an email he would comment for this article but then didn’t return numerous phone and email messages.
Brookhaven’s financial adviser, Ed Wall, said the development authority heard concerns about the annual payments and agreed to hold the money in escrow while negotiating how it should be distributed.
“The city wants to be a good citizen. They just want to work with the school board and the county,” Wall said. “There hasn’t been any kickback payment.”
Mayor John Ernst said the project makes Brookhaven an NBA city, brings world-class medical facilities inside its borders and promotes economic development.
“It’s going to be a major economic benefit that will produce more tax revenues over the long term than what we gave up,” Ernst said. “A kickback refers to something illegal, when someone takes money and then gives it back, so I would not characterize it as an illegal kickback scheme. … We’re operating within state law. Do we need to take a look at legislation? Probably so.”
Elected officials in DeKalb plan to ask state lawmakers to revise the powers of development authorities, according to the County Commission’s resolution opposing the Brookhaven project.
All development authorities in DeKalb should be required to create consistent tax incentive rules and inform the county and school board before approving benefits, according to the July 12 resolution.
The resolution also opposed a separate $11 million tax incentive for a luxury apartment complex in Chamblee. Similar to the Brookhaven incentives, the Chamblee deal requires an annual payment to the city's development authority, worth 20 percent of what the property's taxes would have amounted to if not for the tax break.