Riverwalk Tax Break Could Mean $700K Less for Schools

The approval of a ten-year tax abatement for a planned $100 million mixed use development inside the Cumberland Community Improvement District could have serious financial consequences for the Cobb County School District.

The Marietta Daily Journal reports that due to the tax abatement, which would gradually increase the property taxes on the 7 acre plot at the intersection of Cumberland Boulevard and Cobb Galleria, could cause the Cobb County School District to miss out on upwards of $700,000 in funding each year that the abatement is in place.

Cobb Schools Superintendent Dr. Michael Hinojosa asked for a delay in the abatement process from the Cobb Board of Assessors, stating that he needed more time to review the financial impact of the deal on the school system, which is already facing a serious budget shortfall.

The Board of Assessors did not comply with Hinojosa's request, approving on Tuesday a leasing deal that would keep Riverwalk's developers from having to bear the full load of the site's property taxes for more than a decade. 

Dan Post of the Board of Assessors told the MDJ that Hinojosa's request did not affect the Board because they only look at valuations and approve tax breaks if the valuations are correct without the input of outside parties.

As it currently stands, the site generates roughly $46,000 in tax revenue for the school district. That value skyrockets to over $750,000 if estimates provided to the MDJ by the county finance's office on the value of the Riverwalk development are accurate.

Unfortunately for the School District, they may see a greatly reduced property tax income from Riverwalk for many years.

On Sept. 17, the Cobb Board of Commissioners approved a re-zoning of the property to allow the Riverwalk project to fit the scope of the site's zoning. On the same day, the Development Authority of Cobb County approved a letter of intent to issue $103 million in bonds for the development, which will contain 14 three-story townhomes, 236 condominiums, and 200,000 sq. ft. of Class A office space.

By approving the bonds, the Development Authority of Cobb County can purchase the Riverwalk site and lease it back to Greenstone Properties, Riverwalk's developers. Greenstone Properties will not immediately pay property tax on the site under the terms of this arrangement, and since the Development Authority is a governmental body, it doesn't pay taxes either.

Under the terms of the proposed tax abatement, Greenstone would not pay property taxes on Riverwalk until 2015, when construction is expected to be finished and buildings are ready for occupants. 

Greenstone would then owe the county ten percent of the assessed property tax on the project, followed by twenty percent of the tax the next year, thirty percent the next year, and so on. In 2025, the developers will become fully responsible for the site's property tax burden.

Although Greenstone is listed as the developer of record for Riverwalk, it should be noted that Preferred Apartment Communities, owned by Post Properties' John Williams, has been named a major financial backer of the project.

School district officials told the MDJ that they are pro-business and economic development, but believe that the tax breaks being offered hurt the quality of education in Cobb County.

The bonds that would allow the Development Authority to buy the Riverwalk property and lease it back to the developers has not been carved in stone, yet. On Dec. 18, a Cobb Superior Court judge gets the final say on the deal. If there is no public opposition to the proposal, the judge will authorize the deal and it is expected that the deal will be consummated by the end of the year.