Brookhaven officials were unpleasantly surprised last week to learn that DeKalb County approved city tax breaks for two major commercial developments without telling them. At the Oct. 27 City Council meeting, officials said they’re concerned about “questionable” process and “wrong” numbers in the abatement calculations.
Mayor Rebecca Chase Williams said the projects are good for Brookhaven and that DeKalb apologized for the apparently unintentional lack of notice. But it turns out there’s at least a third tax-break deal within Brookhaven that the city didn’t know about. City officials are now examining the possible budget impacts of at least a half-million dollars in tax abatements.
“Under no circumstance should the city of Brookhaven learn about economic development and tax abatements given away by the county through the newspaper,” said Wendy Butler, the attorney for the city’s Development Authority, which did not review the deals. She added that the county might not have the legal authority to cut the deals.
The two tax-break packages the city only learned of after the fact are a new office tower planned for Perimeter Summit Parkway, with a $460,000 city tax break, and a $77,000 break for expansion of the Source One Direct credit-card company along I-85. Those abatements would be spread out over the next 15 years. The city’s tax breaks were just part of larger abatement packages, including county and school taxes, that are worth millions.
The amounts are significant for the small city, City Manager Marie Garrett said, noting that $77,000 is close to the price of “two police cars fully loaded.”
The abatement packages were approved earlier this month by the county’s Development Authority, which recently branded itself as “Decide DeKalb” and has an all-new board who membership includes a Brookhaven Zoning Board of Appeals member. City officials said Decide DeKalb has apologized for lack of notice, which may be attributed to Decide DeKalb’s recent changes.
However, Decide DeKalb also informed the city of yet another tax abatement it didn’t communicate, in this case for a Cox Communications building. It is unclear when that happened and how much the tax break is.
The mayor and Councilman Joe Gebbia were the only elected officials to directly speak about the situation. Both voiced a view that the deals are probably good and that communication is the main problem. But Garrett and Butler questioned the credibility of DeKalb’s abatement-review process, leaving it difficult to say whether the Brookhaven deals are good investments.
“We think this is a good thing for Brookhaven at the end of the day,” Williams said, but directed staff to craft a legal agreement requiring Decide DeKalb to notify the city of tax breaks. Williams did add that it’s a “legitimate question” whether the Perimeter Summit tower really needs a tax break.
“Look what we got for it…We got a Class A office building,” Gebbia said of that tower. “Talk about a feather in your cap.” He added that the new Decide DeKalb is better than the county’s previous practice of letting individual commissioners heavily influence tax-break deals.
However, Garrett said that Decide DeKalb gave the projects a straight 60 percent tax abatement without any calculation of how the projects might impact the area—including any new city-services costs.
A driver of the Perimeter Summit abatement was a promise to create a total of 1,350 new jobs. But, Garrett said, Decide DeKalb has no mechanism for monitoring whether those jobs are actually created or last for the life of the tax break. And there is no “clawback” provision revoking the tax break if such an economic development promise is broken.
Officials also expressed concern about that Perimeter Summit tower’s valuation. It was publicly announced as a $143 million project, but Decide DeKalb valued it at $85 million for the tax-break deal purposes, Garrett said. Garrett called that figure “questionable,” while Butler went further.
“We are having all the numbers re-run because the numbers were wrong,” Butler said.
Unclear or unknown tax-break deals could affect the city’s budgeting—now underway for 2016—because the city might have fewer tax dollars than it thought, Garrett said.
Butler said Decide DeKalb had no legal obligation to notify the city about abating its taxes. But, asked by Williams whether the abatements were done by correct legal procedures, Butler responded, “It’s in play. There’s a lot of litigation about whether counties can just ride over cities.”
“I hope we’re not looking at litigation or something like that,” the mayor said.
Butler added that, while Decide DeKalb approved the tax breaks, they are not done deals. Both projects are still awaiting bond validation hearings, Butler said.