Following major political controversies about tax abatements for developers in Atlanta and South Fulton, a state legislator has filed a bill that would bar the Development Authority of Fulton County from granting such breaks within cities without the approval of local governments and school boards.

State Rep. Derrick Jackson (D-Tyrone) said he filed House Bill 986 to promote conversations between the DAFC and local leaders. “You would think that would happen naturally, but unfortunately it did not,” he said. “… The whole goal is to make sure development authorities touch base with local municipalities.”

State Rep. Derrick Jackson. (Special)

DAFC Executive Director Al Nash, speaking before the bill was filed on Feb. 20, was not pleased with the concept of restricting the authority’s deal-making. “Overall, DAFC serves an extremely important purpose in Fulton County, as its focus is on economic development that benefits Fulton County as a whole and the needs of all of its residents and not just those in one particular municipality in isolation,” he said in an email. “We always look forward to solidifying and strengthening our partnership with the municipalities to ensure economic development continues within Fulton County.”

Sandy Springs Mayor Rusty Paul, a professional marketer and lobbyist who has had DAFC as a client for about 15 years, said before the bill’s filing that he was aware of its general approach.

He called it “more punitive than policy-setting. It singles out DAFC and leaves the other development authorities operating in the county out of the proposed regulation.”  Paul said he understands the intent was to “start a conversation about the relationships among the cities and the two school boards [in Fulton and Atlanta]. That discussion is healthy and I look forward to it.”

Development authorities are government-created, but independently operating and self-funding, bodies that can offer incentives and tax abatements in a variety of ways. Fulton and DeKalb counties have development authorities, as do many local cities, including Atlanta, Sandy Springs, Dunwoody and Brookhaven. A powerful deal-making ability authorities wield is to issue bonds on behalf of a developer, using its tax-exempt status to grant a partial property tax abatement for a period of time, usually 10 years. The general rationale is to promote economic development.

The DAFC has been targeted with criticism for years for granting abatement deals on luxury projects in such hot markets as Buckhead and Midtown, where there appears to be little need to spur economic activity. Atlanta Public Schools Superintendent Meria Carstarphen, herself a former DAFC board member, is a fierce critic of such deals, with the controversy ballooning to major proportions again over the past two years. Carstarphen has said various tax breaks cost her system tens of millions of dollars in lost revenue each year. In fiscal year 2019, the Fulton County School System lost $6.2 million in “potential revenue” from various abatements and incentives, and $4.8 million in fiscal 2018, according to Chief Financial Officer Marvin Dereef.

Atlanta has its own development authority, called Invest Atlanta. Last year, Invest Atlanta’s president and CEO, Dr. Eloisa Klementich, sent Nash a letter asking DAFC to stop cutting bond-based tax abatement deals within the city limits. She questioned the legality of such deals; said her board is more representative of local taxing jurisdictions; and noted a divergence in the two authorities’ policies on affordable housing. She also raised the issue of “perspective” from the local point of view. “We think it is essential to be at the table for the conversation and the future development in the city,” she wrote.

An illustration of a luxury apartment project planned for 99 West Paces Ferry Road in Buckhead, which generated controversy for a $3.5 million tax abatement from the Development Authority of Fulton County. (File)

Jackson said the Atlanta dispute is one reason why a cosponsor of his bill is Atlanta-area state Rep. David Dreyer. Dreyer did not respond to a comment request.

But, Jackson said, the main motivation for his bill is an explosive dispute that erupted late last year in the recently incorporated city of South Fulton over whether the local government’s authority or the DAFC should grant a tax break for a major commercial project. Controversy within the city government dragged on for weeks, as the Atlanta Journal-Constitution reported, at one point threatening to remove Mayor Bill Edwards and a City Council member from office.

One provision of Jackson’s legislation would bar an elected official from chairing a development authority, to avoid what he called “tension and confusion” about political roles. But local input is his main goal, he said. The bill would bar the DAFC from acquiring property, granting any tax abatements or “undertak[ing] any project” within cities without the “approval” of the local board of education and the city government.

“Although it’s great the county can come in… the county may not be familiar with their comprehensive plan, the land use, just the whole arch of having a particular vision for that city,” Jackson said.

Nash said that DAFC’s perspective has its own advantages. “The need to have a development authority that crosses city lines and takes into consideration Fulton County as a whole cannot be overstated,” he said. “People oftentimes reside in one part of Fulton County and work in another part. In addition, proposed projects may be located in multiple cities [or] jurisdictions, which is something DAFC is well-equipped to handle and has done so in the past.”

Jackson noted that abatements can affect local governments and school system revenues, where people have elected representatives to oversee the operations. “Keep responsibility and accountability where they belong,” he said.

John Ruch

John Ruch is an Atlanta-based journalist. Previously, he was Managing Editor of Reporter Newspapers.