Property

State to appeal decision reversing Rivian’s property tax relief

Credit: Curtis Compton / [email protected]

Credit: Curtis Compton / [email protected]

He called the Rivian deal “a transformational investment” and said “the bond structure of this project is consistent with many other bond deals that have already been validated in this state and even in Morgan County.”

Seven members of the Rivian Morgan County Land, Sky & Water Preservation opposition group challenged aspects of local tax incentives offered to the automaker in exchange for its investment and 7,500 promised jobs.

The state of Georgia has offered Rivian the use of 2,000 acres of land essentially for free until 2047. As part of the deal, the JDA entered into a long-term lease on the property, which will lies about an hour east of Atlanta.

Critics say incentives are often unnecessary or overused because companies base location decisions on other factors such as available labor and infrastructure.

Development authorities in Georgia use rental transactions such as “bonds of title” and usufructs to provide land tax relief as a legal circumvention of state law, which has no constitutional or statutory to provide property tax incentives.

The JDA argues that the Rivian lease is a usufruct, a common type of lease in which the tenant has limited rights and is not subject to property taxes. The Morgan County Board of Tax Assessors ruled on the lease as such earlier this year.

Instead of paying typical property taxes, Rivian and the JDA entered into a payment in lieu of taxes, or PILOT, agreement in which the automaker would pay a reduced tax bill of more than $300 million to local governments and school systems. over 25 years.

Last month, Trammell sided with opponents who argue the deal is not a usufruct but an “estate for years”, in which the tenant has fuller control of the property and is subject to the taxes.

John Christy, a Rivian opposition lawyer, expressed confidence that the judge’s order will be upheld.

“Judge Trammell’s order was supported by established legal precedent and his factual findings well supported by ample evidence in the record,” he said in an email.

Wilson said the state secured one of the strongest economic development deals in its history, including mechanisms to force Rivian to reimburse taxpayers if jobs and investment goals are not met.

He called it “categorically false to suggest that the state and local JDA failed to exercise due diligence before offering discretionary incentives.”

Bond-for-Title transactions are complicated transactions that act as a sort of legal circumvention of the Georgian Constitution’s ban on tipping, which prohibits the government from providing any good, service or property without a fair return.

These agreements are equivalent to a real estate transaction in which a development authority holds title to the property while the company pays rent to the authority. In Rivian’s case, the JDA sought court approval to issue bonds totaling up to $15 billion, which represents the potential future value of the project, but not an amount of money that changes hands.

Neither the JDA nor Rivian had planned to publicly sell the bonds and the taxpayers would not have been responsible.

Development authorities do not pay property taxes and can lease the property to the project developer while providing tax relief. Bonds require a judge’s approval under Georgia law, and it is rare for a judge to overrule them.

On Tuesday, Hyundai Motor Group held a groundbreaking ceremony for a $5.54 billion electric vehicle factory near the Georgian coast. Hyundai received a record $1.8 billion incentive package structured similarly to the Rivian deal.

Cox Enterprises, owner of The Atlanta Journal-Constitution, also owns a roughly 4% stake in Rivian and provides services to the company. Sandy Schwartz, a Cox executive who oversees AJC, is a member of Rivian’s board of directors and personally owns shares. He does not participate in AJC’s coverage of Rivian.