A request by Kroger to receive tax breaks for a planned superstore at the MarketPlace Terrell Mill project in East Cobb was given the go-ahead by the Georgia Supreme Court.
The high court ruled in a unanimous 7-0 vote that a retired Cobb Superior Court judge erred in denying issuance of $35 million in revenue bonds by the Development Authority of Cobb County.
The ruling, which was released Monday (you can read it here), took issue with Judge Adele Grubbs’ interpretation of a state code provision that denies validation of such bonds if a project is not deemed “essential” to “the development of trade, commerce, industry, and employment opportunities.”
Justice Keith Blackwell, writing for the Supreme Court, said that provision does not require an “essential” determination for bonds to be issued.
“To say that “the development of trade, commerce, industry, and employment opportunities is an ‘essential’ purpose of development authorities is not to say that anything financed by a development authority must be ‘essential’ to such development,” Blackwell wrote.
The 95,000-square-foot Kroger store is the anchor of the $120 million MarketPlace Terrell Mill project, which is just now getting underway. Regarded as a linchpin of revitalizing a high-density corridor, the development will include 298 apartment units, restaurants and other retail shops.
At a meeting last month of the Powers Ferry Corridor Alliance—a civic group—Brandon Ashkouti of Eden Rock Real Estate Partners, the project’s developer, said he anticipated “a favorable outcome” by the court. Kroger initially indicated it may not proceed with the store if it lost in court.
The Kroger store is slated be the final part of MarketPlace Terrell Mill to be completed, ideally 18-24 months from now, according to Ashkouti.
Kroger would be exempt from taxes its first year of operation, then would gradually pay an assessed tax value phased in over a 10-year period, rising by 10 percent each year.
The 23.9-acre property at Powers Ferry Road and Terrell Mill Road was eligible for abatements by being included on a redevelopment list by Cobb commissioners. Only Kroger applied for the bonds.
Last spring, another member of the developer team estimated the project would yield annual property tax revenues of $500,000 for the Cobb County School District alone. The property included some offices and retail space as well Brumby Elementary School, now relocated on Terrell Mill.
Two development authority members, including Karen Hallacy of East Cobb, voted against issuing the bonds, worried about setting a precedent for retailers getting tax breaks.
Last fall, Kroger and the Cobb Development Authority appealed Grubbs’ ruling to the Supreme Court, which did not hear additional arguments.
The legal challenge was filed by Larry Savage, an East Cobb resident and twice a candidate for Cobb Commission Chairman.
He cited a state code provision that “gave unrestricted power to the Development Authority to decide what projects would or would not be granted tax abatements and this violates the provisions of the state constitution that require ‘uniformity’ of taxation. There cannot be uniformity when there are no rules.”
Savage said his objection wasn’t “whether the Kroger store was an economic boost but only the question of the constitutional requirement for “uniformity.”
“The Development Authority of Cobb County, and all development authorities in the state, are now free to use their unrestricted discretion in awarding tax abatement deals to any and all projects that suit their pleasure. ‘Uniformity in Taxation’ is toast.”
Savage said he’s not pursuing his case any further because there’s nowhere else to go. He told East Cobb News:
“The Georgia General Assembly could enact legislation that would clarify rules for development authorities. The Cobb County Commission could do the same for the Cobb County Development Authority. I do not expect either would act on anything that does nothing more than protect taxpayers.”
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