Tax breaks sought for
partly built Dunwoody project
Developers say incentives will speed full
project; skeptics call it a handout. Local Govt &
Politics By Mark Niesse - The Atlanta Journal-Constitution Kent D. Johnson
The State Farm
tower rises along Hammond Drive in Dunwoody. State Farm and developer KDC are
seeking $48.6 million in tax incentives not just for future Dunwoody office
buildings, but for a tower that’s already nearly complete. KENT D.
JOHNSON/kdjohnson@ajc.com
Posted: 5:41
p.m. Tuesday, Aug. 16, 2016
Tax incentives
usually are designed to lure businesses to relocate or expand in a new home
town. For the new State Farm campus in Dunwoody, the insurance giant and developers are
seeking $48.6 million in tax breaks for one office tower that’s already nearly
finished and two more that are planned.
The site’s
developer, Dallas-based KDC, says the money will help speed up the full
project. In all, the State Farm project is expected to house about 7,500
employees on a 17-acre campus near Perimeter Mall.
Skeptics say
the tax breaks sound like an after-the-fact handout. “They’re asking for an
incentive for something they’re already doing,” said Brent Lane, director of
the University of North Carolina Center for Competitive Economies. “We’re doing
away with the charade of doing something to incentivize behavior. It’s just
giving away money.”
A rendering shows the plan for a future State Farm campus in Dunwoody,
which could include up to four buildings on a 17-acre campus at Hammond Drive
and Perimeter Center Parkway.
State Farm decided to grow its metro area offices in Dunwoody long before requesting
public financial support, which would come from property taxes the company
would otherwise pay to DeKalb’s school system, the county government and the
city of government.
The insurer announced the plan in early 2014 and the first building, next to the Dunwoody MARTA
station, is planned to open by the end of this year. The three State Farm
buildings will provide about 1.8 million square feet of office space, and a
fourth building could be added in the future.
KDC says the
tax incentives are needed to justify moving ahead with the next two office
buildings. In return, the company will commit to breaking ground on the next
phase in 2017 instead of 2019 as previously planned, avoiding the possibility
that State Farm would change its business plans.
The Dunwoody
Development Authority will vote on the tax incentives, which would last for 17
years, as soon as next month.
Without the tax
benefit, State Farm would lose money paying off its current leases in current
offices while also renting the new office space, said Alex Chambers, regional
vice president at KDC. The tax abatement is based on the value of both the
existing tower and the next two buildings.
“The abatement
request was to even the playing field between starting the project next year
and waiting until the leases run off,” Chambers said. “It’s certainly not a
financial windfall. If there’s a windfall, it’s probably for the city and the
county” because the tax breaks will expire sooner.
Even after the
$48.6 million in tax abatements, the State Farm project will generate $129
million in estimated property tax revenue over the next 17 years, according to
a study by Georgia Tech’s Enterprise Innovation Institute for the Dunwoody
Development Authority.
A gratuity for the developer? DeKalb Commissioner Jeff Rader said governments should
make sure that the investment of tax money is truly essential to making the
development happen. “If the investment is already made, why would you confer
that gratuity upon the developer?” Rader asked. “Their whole business strategy
here is to consolidate business on a single site.”
The county
government and school system should have a say-so over abatement policy,
especially since the city is the smallest of the three governments paying
incentives, he said.
KDC approached
Dunwoody earlier this year about tax breaks, said Michael Starling, the city’s
economic development director.
Before moving
forward, the Development Authority will evaluate whether the existing tower
should be included, Starling said. The authority is made up of citizens
appointed by the city’s council and mayor, and it has the power under state law
to give tax abatements.
The incentives
help ensure the project will get done in full, lessening the risk that a
recession could force State Farm to call off its expansion plans, Starling
said. “One of the concerns about these long-term projects is that maybe these
developments don’t get built at all,” Starling said. “The certainty that the
project moves forward sooner and is definitely going to happen — I think
there’s a benefit to that. Does the benefit outweigh the cost? That’s what the
authority is looking at.”
Robert Miller,
a member of the Development Authority, said the incentives are worth ensuring
State Farm builds out the project faster. ‘You could have something worse’ “If this inducement helps them to
make the decision to do it right now rather than wait four or five years, then
I personally feel like that’s good for Dunwoody because it gets the project
done,” Miller said. “You could have something worse. You could have (the
property) declining and stagnant, and people not wanting to move here.”
The initial
building is scheduled to open by the end of this year, with 13 stories of
office space and eight levels of above-grade parking. Restaurants are planned
for the ground floor. The tower will help the city of Dunwoody retain 1,815 employees and create 700 new jobs, according to the Georgia Tech study.
The next two
buildings are estimated to retain 3,485 jobs and create 1,500 more, according
to the study. In all, the project represents $595 million in real property
investment over the next five years.
State Farm,
based in Bloomington, Ill., posted a $6.2 billion profit in 2015, up nearly 50
percent from 2014, largely on gains in its investment portfolio. Revenue rose 6
percent to $75.7 billion.
Dunwoody
resident Cheryl Majeste said she’s concerned about her government giving
handouts that will affect the tax base for DeKalb’s public school system. “Taxpayer
money should not be spent to prop up organizations that are already very well
off,” Majeste said. “I’m outraged, and I’d hope every adult in this community
would say, ‘This is not fair to the children.’”
STATE FARM’S PROJECT
Where: Dunwoody, near
Perimeter Mall
Buildings: One nearly
finished, two more planned. A fourth could be added.
Employees: 7,500
Value of tax breaks sought: $48.6 million over 17 years
Property taxes after breaks (est.): $129 million over 17 years
Related
No comments:
Post a Comment