By Gerhard Schneibel

The city of Sandy Springs will limit the occupation taxes it charges business to $400,000 a year in an effort to be pro-business and in light of a legal conflict with the Sandy Springs-based energy provider Mirant Corp.

Without the cap, Mirant’s occupancy tax bill for 2008 would exceed $12 million, based on its gross receipts. At $400,000, Mirant’s tax bill has been cut by roughly 97 percent.

The next most taxed company in the city — San Jose, Calif.-based Cisco Systems — was charged $398,144, according to Assistant City Manager Steve Rapson.

“How can we justify charging them $12 million? We can’t even explain that to a reasonable judge,” Rapson said.

The council voted the amendment into effect 4-0 on Sept. 16. Dist. 5 Councilman Tibby DeJulio and Dist. 4 Councilwoman Ashley Jenkins did not vote. The measure would have included an annual increase in the limit of no more than 3 percent, but Dist. 1 Councilman Doug MacGinnitie removed that clause in his motion to approve.

“I’m philosophically opposed to building in a cost-of-living increase on this kind of tax,” he said. “I just think that is a bad precedent; $400,000 is a lot, and to add 3 percent a year is even worse.”

DeJulio drew the distinction between an annual tax increase and an annual increase in a tax cap.

“Nobody hits our maximum” occupancy tax, he said.

Mayor Eva Galambos replied: “Oh, yeah. These people will.”

Galambos, DeJulio and Jenkins questioned the legality of the amendment.

Jenkins said the city created the amendment because it “ran into a problem,” and now “it looks like the only beneficiary is currently this one company,” Mirant.

“I’m concerned about that,” she said.

While the cap technically applies to all businesses in the city, only about 20 surpass $100,000 in annual occupancy taxes, Rapson said.

Galambos said the amendment will create inequality. “You are giving some companies … a cap, and the other companies will be going up, up, up, up as their gross receipts go up.”

Dist. 6 Councilwoman Karen Meinzen McEnerny said the purpose of the cap is to promote business. “I think this motion goes to the heart of our community’s best interest to encourage successful companies to stay.”

Dist. 3 Councilman Rusty Paul argued it’s not legitimate to say the cap benefits only one company. “It is a cap for all companies,” he said. “Based on the current gross receipts, apparently only one company is affected. But this is a law that will go into perpetuity, and in the future there may be many companies that are affected.”

MacGinnitie acknowledged the cap does benefit Mirant.

“The whole reason we have a maximum is because of this company,” he said.