While development authorities are an essential economic development tool in Georgia, they need more controls to prevent abuses, witnesses told a state Senate study committee Thursday.
Local government and school district officials have complained that development authorities are too prone to lavish property tax abatements on developers that take away the revenue they need to provide services. The study committee has been meeting during the summer and fall to come up with recommended legislation for the full Senate to consider this winter.
Some of the problems are structural, DeKalb County Commissioner Jeff Rader testified Thursday. He said members of development authority boards tend to remain on them after their terms have expired because no one has been appointed to replace them.
In DeKalb County, tax abatements tend to vary according to the size of a project rather than maintaining uniformity, Rader said.
“There’s really no qualitative analysis that goes into these things,” he said.
Worse still, there’s no substantive way to determine whether a developer seeking tax abatements would build a project without them, Rader said.
“Money that goes to unnecessary tax abatements hurts school districts and other governments,” he said.
Julian Bene, a former member of the board at Invest Atlanta, the city’s economic development arm, cited several instances in recent years where a developer has asked for tax abatements and been turned down, yet went ahead and built their project anyway. He mentioned the expansion of Ponce City Market in Atlanta’s Old Fourth Ward as an example.
Bene said some development authorities approve tax abatements simply to gain the fees they earn from the transaction as a revenue source.
“We have a public trust problem with development authorities,” he said. “If the boards of these authorities aren’t making decisions in the public interest, you’ve got a problem.”
Both witnesses said tax abatements tend to be most beneficial when offered for job-generating industrial projects where there’s competition from other communities. Apartments and retail projects don’t tend to need tax breaks because the developers are motivated to build them because of market demand.
Sen. Max Burns, R-Sylvania, the study committee’s chairman, said one topic the panel should consider in its recommendations is addressing the charging of fees by development authorities to generate revenue.
Rep. Mary Margaret Oliver, D-Decatur, who is on the committee despite being a member of the House, suggested eliminating per-diem payments to members of development authority boards.
The committee is planning one more meeting Nov. 30 to begin shaping its report to the full Senate. The panel expects to release the report next month.
This story is available through a news partnership with Capitol Beat News Service, a project of the Georgia Press Educational Foundation.