Representing You: State lawmakers want to know more about local development incentives

Local development authorities have been at the heart of the biggest business deals in Georgia, including the record-breaking incentives that lured electric-vehicle manufacturers Hyundai and Rivian to the Peach State.

But such huge incentives packages as the $1.8 billion that went to Hyundai and the $1.5 billion doled out to Rivian have given rise to concerns that local governments and schools are losing massive amounts of tax revenue to development authorities without sufficient state oversight or demands for transparency.

A state Senate study committee has begun a series of meetings to look for ways to require more accountability from development authorities without sacrificing the jobs they help create.

“Our objective is to support economic development in this state,” said Sen. Max Burns, R-Sylvania, the study committee’s chairman. “[But] it’s important that we understand the ramifications of our development authority decisions … and the impact they have on our state.”

About 1,300 local government authorities have cropped up across Georgia since 1995, when the legislature passed a law authorizing cities and counties to form authorities, Kyle Hood, director of the state Department of Community Affairs’ Community Development Division, told members of the study committee late last month. Of those, 575 are development authorities or downtown development authorities, he said.

Sen. Steve Gooch, R-Dahlonega, who formerly served as a Lumpkin County commissioner, said local development authorities are critical to economic development when corporate prospects come calling.

“Without these authorities, county governments would have to go to taxpayers and put out a referendum,” he said. “It’s the only development tool they have.”

Despite the jobs development authorities help generate, the General Assembly has put some controls in place to monitor their activities.

In 2018, lawmakers passed a bill requiring authorities to register with the state annually and undergo financial audits.

This year, the legislature passed a measure capping the per-diem allowance for directors of development authorities in counties with populations of 550,000 or more. The bill also gave the state ethics commission jurisdiction to handle complaints aimed at authority directors.

But state Rep. Mary Margaret Oliver, who sponsored this year’s legislation, said more needs to be done.

Oliver, D-Decatur, introduced a bill last year giving cities, counties, and school districts the right to participate in bond validation hearings. However, the bill failed to gain traction in the House.

Bonds typically underwrite incentives packages development authorities offer companies they’re trying to attract. Once approved by a judge following a hearing, authorities can issue bonds to purchase land for a project or finance construction, resulting in either full or partial abatement of property taxes.

“Abating school taxes without schools being part of the discussion is problematic,” said Oliver, who despite being a member of the House is on the Senate study committee.

Oliver’s bill giving local governments and school districts the right to take part in bond validation hearings has the support of the Association County Commissioners of Georgia (ACCG), which advocates on behalf of counties at the state Capitol.

Kathleen Bowen, associate legislative director for the ACCG, said development projects that contain a housing component are particularly concerning because they bring residents who rely on taxpayer-funded services.

Tax abatements deprive local governments and schools of the revenue they need to provide those services, she said.

Oliver said her efforts are not aimed at the Hyundai and Rivian incentives packages.

“I think those are major state-controlled projects,” she said. “My focus is more on the day-to-day [offering] of tax abatements without much discussion or accountability.”

While Oliver’s bill didn’t pass, Bowen credited the lawmaker’s push for the legislation with drawing attention to the issue. That focus could pay off during next year’s legislative session, Bowen said.

“There’s going to be robust discussion on tax abatements. I consider that a win,” she said. “These deals need to be for the public good. It’s up to those affected by the taxes to be part of the conversation.”

This story is available through a news partnership with Capitol Beat News Service, a project of the Georgia Press Educational Foundation.

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