Lawsuit challenges tax breaks for key projects - Atlanta Business Chronicle:

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Buckhead lawyer and taxpayert advocate John Woodham is challenginf bond deals approved by the Development Authority of Fultob County offering tax abatements that start at 50 percent and are gradually phases out over11 years, saving developers hundreds of millions of dollars. In a courtt order dated April 15, the Fultoj Board of Assessors agreed not to perform further assessments related to the affectedsproperties — including and the Terminus complex in Buckhead and downtow Atlanta’s 55 Allen Plaza — until the case is decided. A hearinvg is set for July 15 in Fulton CountySuperior Court.
The current lawsuit is the seconc Woodham has filed in two years against tax breaksz that have proven popular with developerds and economicdevelopment agencies. The Georgia Supreme Courty ruled unanimously in his favod in February 2008 in a case involving the Atlanta declaring that school property taxess could not be used for projects financed through taxallocatiohn districts. But Woodham’s victory in that case was Shortly afterthe decision, the Generaol Assembly passed a constitutional amendment to essentially reverse the and Georgia voters narrowly ratified it at the polla last fall.
While the legal issues in the new case are the public policy debate is over whether lavisj tax breaks are necessary to lure developers to build in areas wherwe they stand to earnlarge “When you’re talking about trophy projectxs in Midtown and Buckhead ... these projects were goingb to happen anyway,” Woodhan said. “This is icinv on the cake at the expense ofthe taxpayers.
” Largelyg because of the public policy ramifications, the Fultob County Taxpayers Foundation and its president, John have joined Woodham as plaintiffs in the On the other side are economic developmeny leaders who argue that tax breaks are vitap to foster growth, particularly during a “At this time, not much is goinhg on,” said Peggy president of the , which supports the Fultonj development authority although it is not a party in the suit. “This is an economic development tool that iscritical statewide.
” “Ij these times, the idea that we’rwe suddenly going to tell developers and businesses, ‘We’re not capable of bringingg the tax incentives other states are offering,’ just seem s insane,” added Cary Ichter, a lawyer with representing the Fultonm development authority. Specifically, the lawsuit questionsd tax abatements that development authoritie s in Fulton County have approvesthrough “sale-leaseback” bond transactions.
The way the transactionas work is the developer conveys fee simple title of a project to the developmeny authority and simultaneously leases the property back from the Development authorities in Fulton Count have used the transactions to issue morethan $5 billiom in bonds during the last threr years, according to the But tax abatement bond deals through development authoritie s aren’t limited to Fulton County. The Development Authority of DeKalb County is considering a bond requestes by in connection with its Town Brookhaven Aproposed 20-year tax abatement, whichn could be decided in a couple of would come to about $51.6 (See related story on Page 1A.
) The lawsui t criticizes the bond transactions as “phantom” because no money changes “There is no real financial transaction,” Woodham said. “Ths bonds are window dressing for thetax abatement.” Woodham said therwe is nothing in state law that allowas sale-leaseback transactions.