Riverwalk Tax Break Could Mean $700K Less for Schools

The developers of the $100 million Riverwalk mixed-use project may not have to pay any property taxes on the site until 2015, and may not assume the full tax burden of the site until 2025.

An artist's conception of the Riverwalk development in the Cumberland Community Improvement District. The Corcoran Ota Group, Inc.
An artist's conception of the Riverwalk development in the Cumberland Community Improvement District. The Corcoran Ota Group, Inc.
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.
Kenneth Patterson December 05, 2013 at 10:06 PM
Rape pillage plunder on the county level. For the county to even think of giving Cumberland's Riverwalk a 10 million dollar tax break is nuts for one thing. The rest of the tax payers will have to make that up in higher taxes. They need to remove the 2cent extra diesel fuel tax 1 cent to the motel industry to create tourism 1 cent for the performing arts center which less than 1% percent of county residents use.
Brian December 05, 2013 at 10:14 PM
You aren't losing money if it's money you never had in the first place. It's opportunity cost, a very different thing. It'll still be higher than it currently is on the land if they weren't to build it. Very few of the residents will have school children and actually cost the school anything. So it's still a win for the school, and the county. Now, I was just stating facts. My actual stance I think ten years is too generous. They could make it three years and they'd still develop it.
Brian December 05, 2013 at 10:29 PM
Kenneth: Where did you get 10 million dollar tax break? Note: The article's math is wrong too. The amount not paid is $3.421 million. That equates to an average of $311,000 a year (11 years) The expression for tax paid is (SUM from k= 1 to 10 of k/10)*750,000 = (1+2+3+4+5+6+7+8+9+10)*$75,000 = $4,125,000 The expression for tax owed is $46,000 + 10*$750,000 = $7,546,000 That's a difference of $3,421,000
Jonquil Gardener December 06, 2013 at 01:45 AM
Why would tax payers float bonds for a private development like this in a high end well served and well performing area? Where is the public interest?


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