A Georgian legislator is pushing for more transparency in tax incentive proposals for developers before the upcoming legislative period.
Rep. Mary Margaret Oliver, D-Decatur, has tabled a package of laws to allow local government and school systems to participate in the development of annexation and tax cut plans.
“There is conflict and debate in my central DeKalb County and throughout the state over the financial impact of the annexation efforts on the school system and local governments,” said Oliver. “I would like us to have a targeted discussion and strengthen the statutes in order to consider objections to annexations, to check the validation of bonds with related tax reduction issues and to increase transparency for all participants.”
Development agencies often offer property tax breaks or other incentives in exchange for new buildings or expansions in their districts. The plans can take millions of dollars in revenue from schools and public services.
DeKalb County and the county school board fought last fall over the Brookhaven Development Authority’s $ 13.5 million tax relief plan for developers on a mixed-use project. District officials said the city’s plan would cost them millions of dollars.
Clint Mueller, Association County Commissioners of Georgia (ACCG) legislative director, said that in most cases, county governments don’t know about tax cut plans until they’re finalized. Under current law, local governments can object to the mitigation plans in court. Mueller said the districts are not seeking a right of veto, just a say.
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Oliver’s legislative package contains three measures – house bills 23, 24 and 25th. Together, the draft bills would ensure that all those affected by the annexation and bond validation with tax incentives can influence the decision-making process and raise objections.
Although Müller believes the law can encourage abuse, the effects of tax cut plans and other incentives should be carefully studied to determine the overall value for local governments. The ACCG conducted a study this summer, but Müller believes that further assessments should be made before the law changes.
“You could have a situation where a single urban development agency could allow an apartment complex not to pay property taxes for 20 years. But that apartment complex, once built, would bring children into the school system, and that would be district demand – and create city services, “said Müller.
In some cases, governments can offer commercial developers tax credits that in turn create jobs with long-term benefits for the local economy.
“You have to look at the cost side,” said Müller. “It’ll just cost governments more and they won’t necessarily make new jobs out of it. So you have to be balanced about how you do it.”