County to vote on tax breaks
By Sharon Hall
Lumpkin County Development Authority is calling them guidelines for an "Economic Investment Program," but what the document sets out is a way to gauge whether and what kind of tax incentives to offer new and expanding businesses in the county.
The authority presented its plan at the commissioners' work session Feb. 2. The commission is expected to vote on the proposal at its Feb. 16 board meeting.
The need for a policy governing tax incentives was brought to the fore when Hidden Lake Academy requested a 10-year tax abatement for a new school it planned, Mountain Brook Academy.
In return, the school's owner Dr. Len Buccellato promised Mountain Brook Academy would provide 80 new jobs and bring $7 million in economic impact for the county in 2007 alone.
The development authority recommended approval of the proposal to the county commission. Several meetings and negotiation sessions later no agreement could be reached and Bucellato said he would pursue other options.
Since then the authority has been approached by an unnamed manufacturer, asking for similar consideration of a tax abatement to attract a sizable number of jobs from another state to Georgia.
"The authority realized we needed a public policy for this," said authority director Bruce Abraham. "Some communities do this without policies or guidelines, but since there was a need here, our board addressed it."
Board chair Mike Cottrell asked board member Deborah Hutcheson to form a committee to research the issue.
Committee members included Alfred Chang, Jimmy Anderson and Don Trice. Abraham also helped gather information to be considered in formulating a policy.
The policy was formulated to accomplish four major objectives, Trice told commissioners at the work session:
n Attract desirable companies to the county.
n Create additional jobs.
n Expand over time the county's tax base, and
n Create a more favorable balance in the tax base between business and residential development.
Under the guidelines most retail businesses would not be eligible.
"The whole idea is to bring new money," Trice said. "It's not for retail business that would just divide the money that's already here."
For a retail business to be considered, it would have to prove that a substantial majority of its revenue came from outside the county.
Both new companies looking to locate in Lumpkin County and companies here wanting to significantly expand operations or develop additional facilities would be eligible for the economic investment program.
A minimum threshold of $2 million ?hard cost? investment would have to be made in order to qualify.
The policy sets nine parameters for tax incentives.
n No abatements will be granted on existing taxes.
n Incentives granted will be reductions in future ad valorem taxes on new development.
n Formulas of reductions in future levels of taxes will be tailored for each applicant.
n A maximum period of tax reductions is set at 10 years, not to include the initial construction period of no longer than 24 months.
n The tax incentives package will include money issues only and will not include non-financial issues such as location, exaction issues, business issues or other. (The county's request for land for a fire station, made to Mountain Brook Academy, would be an example of on exaction issue. Trice told the board of commissioners the state does not allow the county to use its leverage in this manner.)
n Appropriate legal structure must be adhered to.
n Applicants will pay for all direct legal and other costs related to the negotiation and documentation.
n Applicants must demonstrate a positive attitude toward community participation and involvement.
n Proposed facilities and their operations should minimize any adverse impact on the environment, health, safety or well-being of Lumpkin County and comply with county ordinances and state and federal law.
The authority will require detailed information from the applicant, analyze the projected tax revenue benefits against the proposed incentives package, and make its decision based on whether the cumulative public benefits exceed the cumulative cost of the tax incentives package.
If a company is given a tax incentive program, it will be required to make an annual report to prove its compliance with minimal standards of achievement, such as job creation. The agreement would also contain financial consequences in the event of failure to meet the terms of the agreement.
In putting the guidelines together the committee conferred with numerous experts, including Charley Gatlin, Chief of Staff for Georgia Industry and Trade who has worked with communities on this issue throughout the state; Jeff Lucas, head of project managers for Georgia Industry and Trade; Dan McRae, an attorney who works with development authorities to set these programs up around the state; Jim Finch, head of Economic Development for the Georgia Department of Community Affairs; and Cullen Larson, head of Georigia Economic Developers Association.
The committee also reviewed the Incentives Decision-Making models from the Georgia Economic Developers Association, talked to Gordon, Hall and Griffin/Spaulding counties, and consulted Rope Roberts with Georgia Power about best practices in other north Georgia counties.
It also reviewed a report from the law firm of King and Spaulding on how incentives are used in Georgia, and looked at the Incentives Report from the National Association of Counties Legislative Conference.
Development authorities were created by the Georgia General Assembly to be able to accomplish what local government cannot - grant tax incentives to businesses for the public good.
This is accomplished by transferring their tax-free status to business for a limited time as an incentive to locate in the community. They can do so without the consent of local government, but Abraham said the authority "wants this to be an inclusive process, and we are presenting these guidelines to both the commissioners and the board of tax assessors."
Trice will also make a presentation to the Lumpkin County Board of Tax Assessors at its meeting today, Feb. 8. Regular tax assesssors meetings are held the second Wednesday of the month at 9 a.m. in the conference room of the Lumpkin County Courthouse and are open to the public.
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