Developers planning to turn the area surrounding Philips Arena into a mixed-use entertainment district would get a tax break to help pay for their project under legislation that won initial approval from a Senate panel late Tuesday.
Los Angeles-based CIM Group is considering spending hundreds of millions of dollars on the project, aimed at cementing the western edge of downtown as one of the Southeast's biggest entertainment draws.
The sales tax break was amended onto House Bill 937, which would extend a tax break for major business expansion projects — such as the Falcons stadium and Baxter International's plant near Covington — in the Senate Finance Committee. Gov. Nathan Deal was backing the original bill, which his staff said is needed to help attract big businesses and major expansion projects to Georgia.
The amendment was sponsored by Senate President Pro Tem David Shafer, R-Duluth.
Robert Highsmith, an attorney for the Atlanta Hawks and CIM Group, is also Shafer’s campaign lawyer. He said the amendment does not specifically say how much developers would receive, but that it makes them eligible for a tax break.
Sen. Bill Heath, R-Bremen, a member of the committee, called the tax break a "gratuity" to developers, and thus unconstitutional under Georgia law.
“This amendment has popped up time and again,” Heath said. “This amendment would have some constitutional problems.”
Highsmith said the tax break wouldn’t legally amount to a gratuity, or gift from the state to developers.
State legislation to extend a rental car tax could also be required to help clear the way for the project.
The Atlanta Journal-Constitution reported recently that discussions are fluid on the project and coincide with negotiations with the city over public support for a major Philips Arena renovation. But the Hawks and its partners would steer private development around the arena.
Among the ideas under consideration is a complex similar to L.A. Live at Staples Center in Los Angeles that would include more retail stores and restaurants and perhaps offices and residences, said two people with direct knowledge of the discussions.
The Hawks would attempt to create a live-work-play destination in an area largely populated by workers and tourists. The team is contemplating a number of properties around the arena, including land within downtown’s “Gulch, ” but additional property as well.
Highsmith said there have been a dozen proposals over the years to redevelop the “Gulch” area that have never come to fruition.
