Six years ago on the final day of the General Assembly’s session, lawmakers passed a sales tax break for owners of giant yachts who get their vessels repaired or retrofitted in Georgia, a move backed by a company that was a big donor to state politicians.
House Bill 125 was pushed by state Rep. Ron Stephens, R-Savannah, who said the owner of the Savannah Yacht Center — the Colonial Group Inc. — was planning to invest $50 million to $60 million into the big-boat business and promising to create hundreds of jobs.
At the time, it was seen as symbolic of an era when the General Assembly was passing a lengthy list of tax breaks for businesses in hopes of creating jobs. Many of those special-interest tax breaks will be reviewed by a joint House-Senate committee later this year.
The Savannah Morning News reported last week that the Colonial Group sold its superyacht storage and maintenance facility located adjacent to its petroleum facility on the Savannah River for $100 million.
The shipyard and business were purchased by the parent company of Safe Harbor Marinas, one of the world’s largest marina operators with 135 locations, the Morning News reported.
The Savannah Yacht Center opened in 2017 — the year the tax break was approved — and has been among the only facilities in the United States that can service yachts longer than 60 meters, or 196 feet.
According to the Colonial Group, all 50 Savannah Yacht Center employees will become part of the Safe Harbor Marinas team, the Morning News reported.
“While it was a great experience building this business, I did not believe we were best positioned to allow it to reach its full potential. I am confident that it will reach new heights as part of Safe Harbor Marinas,” said Christian Demere, president and CEO of the Colonial Group.
The Colonial Group operates a collection of shipping, oil and gas businesses, including Enmark gas and convenience stores. Forbes magazine last year ranked it the 199h-largest private company in the country, with $2.7 billion in revenue.
The company and Demere have been active in state politics, contributing more than $350,000 to state candidates in the past decade. Gov. Brian Kemp’s campaigns, for instance, have received more than $50,000 in contributions from Colonial and its president, and his leadership committee received an additional $40,000 from the company for his reelection campaign.
Credit: TNS
Credit: TNS
In 2017, Savannah lawmakers pushed the yacht tax break as a potentially big jobs producer if other companies got into the market.
The tax break only applies after yacht owners have spent more than $35,000 in sales taxes on “tangible property,” such as parts, to retrofit, repair or maintain their vessels. Lawmakers said it would help Georgia compete with giant yacht repair businesses in Florida.
By state tax break standards, it has a relatively small impact on state revenue because there is a limited number of clients with large vessels needing such work and coming to Georgia to get it done. Officials estimate it costs the state less than $1 million a year in lost revenue.
While the bill passed, not all legislators were sold on the idea.
“We would all like to have special treatment by the Department of Revenue for businesses and industries,” said then-state Sen. Josh McKoon, now a candidate for chairman of the state Republican Party. “The problem is we send a message that if you come to the General Assembly and say you are going to create X number of jobs, you can negotiate special benefits under tax laws.”
Sen. Nan Orrock, D-Atlanta, said at the time that the public “will see that Georgia is giving tax breaks to people with $25 million yachts.”
“They,” Orrock said, “will say, ‘Here the rich folks are walking away with a tax cut.’ "
The tax break almost got nixed in the General Assembly’s post-pandemic session in June 2020 when lawmakers feared a massive drop in revenue and senators were looking to save money by cutting or reducing a number of tax breaks. But the Senate effort stalled, and Georgia’s economy has been strong since then.
Still, Kemp and House and Senate leaders earlier this year announced plans for a yearlong review of special-interest tax breaks that cost the state — and save some individuals and businesses — billions of dollars. Senate leaders, in particular, have pushed to study tax breaks to see whether they are doing what the lobbyists who promote them promise they will do: create good-paying jobs and encourage business investment.
