Legislators slipped a tourism tax break for developers into a bill on the final day of the session that could cost Georgia tens of millions of dollars, though supporters say it will more than pay back the state in an expanded tax base and jobs.
Builders of golf courses, convention hotels with conference centers, racetracks, marinas, water parks or recreation facilities could get back as much as 25 percent of construction costs in Georgia sales- and use-tax rebates over 10 years. It is a new way to add development incentives, like the $388 million in incentives Georgia and local governments gave to Kia Motors to build a car factory in West Point.
Two projects that were already in the works could benefit. A 1,400-acre Bartow County sports complex that could begin construction this year might be the first to apply, if Gov. Nathan Deal signs the bill, and the $700 million proposed Falcons stadium also might qualify.
No one can say how much the rebates could cost the state because any development that is worth more than $1 million and meets other criteria could apply. A key requirement is that the project must attract at least 25 percent of attendees from out of state.
Supporters say the rebates will attract new development.
"It absolutely will create jobs all over Georgia," said the legislation's sponsor, Rep. Ron Stephens, R-Savannah.
It also will leave the state with taxes it would not have otherwise collected, he said.
Critics question the philosophy of the rebates and the wisdom of giving away taxes when teachers are being laid off, and roads and bridges are crumbling.
"I think this policy seems inherently risky," said Rep. Jason Spencer, R-Woodbine. "I don’t think it is the government's role to be essentially a bank. Once we start butting into the free market like this and complicate our tax code, it is usually not a good thing for the free market. It is usually a good thing for a few."
Sarah Beth Gehl, deputy director of the Georgia Budget and Policy Institute, a nonprofit Atlanta think tank, said the legislation leaves many questions unanswered.
"It is up to the governor's discretion on who gets it, so it could cost the state millions of dollars each year or nothing," she said. "... The big question for me is are we handing out tax breaks to industries and businesses that would have come here anyway?"
Steve Shattuck, a spokesman for Great Wolf Resorts, which is considering building a water park by Lake Lanier, said incentives are important, but they also look for critical ingredients such as nearby population.
"It is one of many factors we consider when we go about site selection," he said.
The legislation began as House Bill 321 but stalled as Stephens negotiated to get Deal's support. The approved bill gives the governor final say in picking qualifying developments. But Stephens ran out of time, so he worked with Sen. Ronnie Chance, R-Tyrone, to attach it to HB 234, which will give state and local tax breaks to aircraft maintenance companies.
Chance introduced the amended bill to the Senate during the session's waning hours without mentioning the tourism tax break. He later apologized and said he forgot in the heat of last-minute legislation.
His oversight attracted critics.
"The manner in which this was done should arouse suspicion of anyone who thinks government should operate in an open and transparent way," said Sen. Nan Orrock, D-Atlanta.
The Department of Community Affairs will take rebate applications, which must include information such as jobs created, wages and revenue estimates. The DCA will hire a third-party company to analyze the numbers. Developments can request the rebates after they open. If the project fails to live up to requirements, developers must pay back the rebates. The rebates do not apply to sales taxes for education.
Stephens believes Georgia had to put tax-break incentives in place "to be competitive and step up to the plate like other states have done."
For a project under way in Bartow County, LakePoint Sports Development Group and partners have 1,400 acres under contract just north of the Cobb County line along I-75 for a sports complex of 16 baseball fields where national tournaments will be played, a dozen soccer or lacrosse fields and a 100,000-square-foot facility for indoor sports, along with shopping, entertainment and offices. They have talked about bringing as many as 2,000 jobs.
The company did not return phone calls, but David Archer, the Cartersville attorney representing the land owners, said closing is scheduled for May 31, and the developers have said they want to take advantage of the new tax breaks.
Frank Poe, executive director of the Georgia World Congress Center, said they are assessing what effects the legislation would have on building the proposed Falcons stadium.
Stephens said he trusts the controls that the bill put in place to make sure it will have a positive financial impact. He based the legislation on 15-year-old Kentucky laws, which have returned nearly $50 million to developers in return for a new public aquarium and other attractions.
For the first time, the Kentucky Legislature ordered a cost analysis this year after their governor granted rebates to a proposed, controversial Noah's Ark theme park.
Spencer said Georgia should invest its money instead in things such as education and infrastructure that will bring high-paying jobs rather than resort wages.
"That is what is going to get the good jobs to come here," he said.
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