Cobb schools, developers in dispute over tax breaks

One of the state’s most prominent developers says a new project he’s backing can’t go forward without millions in property tax breaks from Cobb County, but the school board is trying to block the deal before it draws more blood from a system already deep in the red.

Fronting the $103 million Riverwalk development is John Williams, founder of Post Properties, two-time chairman of the Cobb Chamber of Commerce, and a major force in developing signature community projects like the county’s convention center and performing arts center — both of which have centerpiece rooms that bear his name.

“Nobody has invested more money in Cobb County than me,” Williams said Tuesday night, as he sat on a plastic chair for two hours while the school board debated in a closed-door executive session whether to oppose the tax breaks being offered to the Riverwalk project.

The dispute is expected to head back to a Marietta courtroom next week, after the school board voted unanimously to continue the legal challenge that threatens the tax incentives being offered to the project. The two sides agreed Thursday to continue negotiating.

Williams’ group wants to build apartments, town homes and an office tower in the heart of the Cumberland business district, not far from the site of the new Atlanta Braves stadium. They extracted tax breaks from the Cobb County Development Authority that would cost Cobb schools $4.3 million over the next decade.

“We made the decision to build this project based on the incentives … plain and simple,” Williams said. “We can’t do it any other way.”

Critics view the tax breaks as significant for at least two reasons. In a county that has always prided itself on low taxes and fiscal conservatism, the authority has never granted such incentives to help a speculative office/residential venture; and critics are concerned that others will seek similar taxpayer help for their developments. That includes a $400 million entertainment district the Braves want to build outside their new ballpark.

“This takes it to a whole new level in terms of incentivizing something,” said Larry Savage, one of the residents who joined the school district in objecting to the Riverwalk incentive plan. “To use an old country boy term: We’re getting a little too big for our britches sometimes.”

‘It’s easy to make things not happen’

The dispute is a collision of the arcane world of economic development with a school district that faces an $80 million deficit.

In December, the school system and residents filed a rare legal objection to the development authority’s tax break offer. It is believed to be the only legal challenge of its kind in more than four decades of economic development in Cobb.

Critics complain that the proposal will come at a heavy cost to a school system that has furloughed and laid off teachers in recent years.

But Williams said the development will generate millions the district won’t receive unless it’s built. And, he added, the developers have offered to pay the schools more than $139,000 while the project is under construction — essentially making up tax revenue the district would have lost during the three-year construction period, when the property would normally be off the books.

Williams said the project is dead without the incentives.

“It’s very easy for folks politically to make things not happen,” he said. “It’s harder to make things happen.”

If Riverwalk survives, the project would include a 10-story office tower, 236 apartments and 14 town homes on seven acres about a mile from the ballpark site. It would be the first new office tower in the Cumberland Community Improvement District in 13 years. And Cobb officials view the addition of 237,000 square feet of premier office space as critical in their effort to remain competitive with neighboring counties.

Greenstone Properties would develop the site, with Williams signing on as a major tenant who will occupy three floors with an option to buy the building.

‘… And they’ll get 100 percent of nothing’

Like hundreds of other authorities throughout Georgia, the seven-member Cobb County Development Authority is a public body that rarely draws attention or scrutiny. It uses tax incentives to lure new companies to the county or help existing businesses expand and create jobs.

Clark Hungerford, chairman of the development authority, said incentives grow the tax base and provide more money for schools and county government. The incentives offered to Riverwalk will bring $3 million to the school district that otherwise would not be realized over the 10-year period, according to an appraisal from the Cobb Tax Assessor’s Office.

“Without the abatement, this development probably will not happen and they’ll get 100 percent of nothing,” Hungerford said.

Critics counter that the land, especially being just a mile from the Braves site, shouldn’t need incentives to lure development. And, they say, the school district needs the money a lot more than a wealthy developer.

“There are plenty of developments in the Cumberland core that get no incentives,” said Cobb Commissioner Bob Ott, whose district includes Cumberland.

It’s unclear whether the school board will oppose the tax breaks to the bitter end.

While the board is continuing its legal objection, a hearing originally scheduled for today has been postponed to allow for more talks. A Cobb Superior Court judge must sign off on the bonds — a final hurdle that allows the financing to proceed. That hearing is now scheduled for Jan. 16.

But what, exactly, the board wants remains a mystery. When asked if they wanted the delay to negotiate for more money, school board vice-chairman Randy Scamihorn said he was “not prepared” to answer the question, and would “yield” to their lawyer.

“I believe we need more specifics,” Scamihorn said. “We want development, but we have to make sure everybody has opportunity.”

Tight budgets, tough decisions

As the race to attract business has become more intense in the wake of the recession, school districts everywhere are facing increased pressure to give up tax dollars when local economic development officials come knocking, said Angela Palm, director for policy and legislative services with the Georgia School Boards Association.

She said tightened school budgets have made the decisions more difficult whenever there’s discussion about losing revenue.

The association may increase training for school board members on how to deal with such decisions, since they are expected to face more of them.

“Across the country, the competition for business is much greater,” she said.

In Cobb, the Riverwalk dispute has already led to policy changes at the development authority. Earlier this month, the authority’s board agreed to notify the school board when developers ask for tax breaks. It also agreed to ensure that schools don’t lose revenue while projects are off the tax rolls during construction.

Karen Hallacy, an authority board member, last month raised concerns about the board needing to communicate better with the school district and other affected parties.

“I don’t think the onus should be on them to see if they are going to be impacted by us,” Hallacy said, adding that there needs to be better communication “all the way around.”