State qualifies Falcons, Braves for sales tax exemptions on stadiums

As the splashy new stadiums for the Braves and Falcons take shape, the two franchises have been told they will not have to pay sales taxes on construction materials for their respective facilities — saving each millions of dollars in addition to the hefty public subsidies they already are receiving.

The disclosures have infuriated critics who blast the use of public funds to help wealthy corporate owners build sparkling new facilities they could afford on their own, and which will increase the value of the franchises.

But the teams and their allies defend the tax credits as pittances for developments projected to have giant economic footprints that will generate revenue for the state and local governments.

“We’re pumping a lot of money into the system,” said Mike Plant, the Braves’ executive vice president of business operations, who estimates SunTrust Park and the associated mixed-use development will generate about $28 million in sales and property taxes when opened in 2017.

The Braves are building on undeveloped land that currently nets about $305,000 in property tax.

“That’s what our vision was all along,” Plant said. “We are trying to create this destination, and the ballpark is a huge driver.”

But there are skeptics.

William Perry, the executive director of Common Cause Georgia, said the sales tax exemptions are troubling because they are often not recognized by the public as part of taxpayers’ contribution.

“I don’t think that most people know that on top of the taxes collected for these facilities, that they aren’t paying sales taxes themselves,” Perry said. “It’s this kind of thing that causes the total public investment to keep going up and up.”

J.C. Bradbury, a sports economist at Kennesaw State University, said no one should be surprised that the teams ask for all the incentives available to them.

“The problem is not with the application, but with the law itself,” Bradbury said. “I don’t think people would be upset if the law was amended to say that companies already receiving big public subsidies are ineligible.

“It’s legal, but I don’t know that it’s really ethical.”

The city of Atlanta plans to issue bonds to raise $200 million toward the construction cost of the Falcons stadium, and taxpayers will spend potentially hundreds of millions of dollars more toward interest, maintenance and operating costs from the city’s hotel-motel tax.

Cobb County will provide the Braves with $368 million toward construction of SunTrust Park, plus an additional $35 million for 30 years of capital maintenance.

The teams are eligible for the sales tax exemption thanks to a state law that allows large-scale developments to be declared a project of “regional significance.” The final decision rests with the heads of the state Revenue and Economic Development departments, who are both appointed by Gov. Nathan Deal.

Department of Revenue officials cited state confidentiality laws in declining to comment on the status of the teams’ requests, or how much each would cost the state in lost revenue. Plant, the Braves executive, said the break would be worth millions for the baseball club. Estimates have ranged as high as tens of millions of dollars for the Falcons’ project.

The Braves’ letter applying for the sales tax exemption shows that the team initially wanted to avoid paying sales taxes on materials for its $452 million mixed-use development being built alongside the stadium. The Aug. 5 letter asked for both projects to be declared a “competitive project of regional significance” entitled to the tax breaks.

The mixed-use project was deemed ineligible for the program, and the team said it abandoned its request.

Georgia lawmakers often dole out tax breaks for construction materials for projects large and small. In this legislative session, proposals are pending to grant the sales tax exemptions for construction of a new addition of the Georgia Aquarium and an expansion of Zoo Atlanta. The Georgia Budget and Policy Institute estimates both would cost a combined $3.4 million over five years.

The Falcons and the Georgia World Congress Center, the state agency that would own the stadium, also both aggressively pursued the tax breaks. Frank Poe, the center’s director, noted in a 2013 letter seeking the tax break that Falcons executives threatened to leave downtown if the team didn’t land public funding.

“If you combine the potential loss of economic stimulus for our capital city with any number of possible alternatives, including the loss of our state’s only NFL property, the significance of the project is made clear,” Poe wrote.

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