Editor’s Note: The Reporter has covered concerns in Atlanta about tax breaks for high-end real estate developments, and recently reported on tax abatements offered by authorities in other local cities. In this commentary, Julian Bene discusses his concerns with tax breaks. Bene is a former member of the board of directors of Invest Atlanta, the economic development authority of the city of Atlanta. A retired management consultant, he has a degree in economics and politics from Oxford and an MBA from Harvard. He comments on local incentive topics on Twitter at @julian_bene.

Elected officials and board members are belatedly re-thinking Atlanta’s go-along approach to tax breaks after public outcry over recent mega-deals.

Giving Arthur Blank $900 million of our hotel-motel taxes to replace his stadium, according to my analysis of the city’s 2019 financial report, was ridiculous — which is why former Mayor Kasim Reed insisted it ‘only’ cost $200 million.

Julian Bene. (Special)

Giving real-estate billionaires $1.9 billion in tax exemptions for a private development in the downtown area known as “The Gulch” was crazier – and some of us challenged the deal’s legal flaws, still in court.

So, when should Invest Atlanta or the Development Authority of Fulton County give tax breaks? Based on eight years on Invest Atlanta’s board, discussing this with good people, I recommend the following principles.

Goals that tax breaks potentially serve include: growing the tax base, attracting jobs, housing affordability and sustainability. Breaks reduce resources for schools and public services or increase residents’ taxes, so should be treated like real money ($27 million in 2018, and rising).

Projects should only get breaks if they would not happen without one. Developers and employers pitch breaks smoothly — it’s free money for them. So responsible boards have to assess what the company would do without an incentive.

Recent luxury apartment and trophy office towers in Midtown Atlanta? They were coming regardless of the millions in tax breaks they received, to meet hot demand. Employers seeking tech talent and access to a hyper-convenient airport are also coming regardless, though some prizes warrant modest incentives as insurance – think NCR’s 5,000 jobs.

For deals that likely won’t happen without incentives, what price is worth paying? Property tax breaks are 25% for 10 years. It’s better to grow the tax base by 75% than by zero on developments that have location choices, like UPS’s Fulton Industrial hub.

For jobs wins: How much per job, and what quality of jobs? Sadly, few employers attracted to the city offer mid-skill jobs for non-degreed folks, our highest need. We’d be better off funding skills training than over-paying Norfolk Southern to relocate HQ jobs here. Georgia’s film tax credit has us paying some $50,000 each year for every job. We should instead pay that to teachers to educate our kids.

For apartment projects that offer discounted units in exchange for a break: Is the subsidy reasonable? Recent deals costing $10,000-$20,000 per unit per year were developer welfare. Better to give breaks or grants to preserve older multi-family properties. Apartments at MARTA stations might merit breaks for sustainability, if they walk the talk and forego parking.
Tell your elected officials you expect them and the boards they control to agree incentives only in return for good value for residents. Your voice helps!

Your Views on Tax Abatements

Local governments’ use of property tax abatements to spur development of large real estate projects found little support from 51 readers who responded to an informal Reporter online survey.

About half the 51 respondents to the survey opposed the use of such abatements, agreeing that the private market should decide the viability of projects. Another quarter said abatements should be used rarely, only when a project wouldn’t happen otherwise.

Ten respondents agreed that tax abatements should be used frequently or always to boost long-term tax revenue or stay competitive with other areas.

The survey was posted on the Reporter’s social media and distributed through our weekly email newsletter of top stories in our communities. To participate in future surveys, subscribe to the
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