There is a little-known process in economic development. Most companies, from car manufacturers to professional sports teams, seek incentives. In the case of the Atlanta Falcons’ new stadium, $254 million -- $200 million in up-front construction costs and the rest in tax rebates and land costs -- will come from taxpayers. The Braves also are relocating to Cobb County. That move will costs taxpayers $386 million. Porsche’s new $100 million North American Headquarters in Atlanta was helped along by $14 million in state and local incentives.
When these deals are struck, it’s not only the cities and counties that have to sign off on tax breaks but also all taxing authorities, including school boards. Normally there are no snags. School boards are aware that nothing from nothing leaves nothing. That’s a lesson the Bibb County school board has yet to learn.
Area economic developers, the Macon Economic Development Commission, the Industrial Authority and state recruiters have been working for years to get Kumho Tire to locate its first American plant in Macon. It’s been a long struggle. When the decision to build the plant was announced in 2008, everyone was ecstatic. The plant was supposed to bring 450 jobs and $215 million in investment. Then the recession hit and plans were put on hold. But in July, Kumho announced the project was about ready to go, but instead of the $215 million investment, Kumho said it was putting $415 million into the plant.
A state grant helped prepare the site for development, and local property taxes on Kumho will be phased in over 20 years for an estimated incentive of $17 million. Here’s where the snag hit. The deal requires Kumho to make payments in lieu of taxes to the school system, the local government and the Macon-Bibb County Industrial Authority. Each entity had to sign off on the deal. The school system would have earned $9 million in payments over the next 20 years, but the system didn’t like the split. It demanded $12 million. Time was running out. Kumho wanted the deal done by the end of 2014.
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The school board balked at the Industrial Authority’s share. School board member Jason Downey said, “The county has the job of funding the Industrial Authority, not us.” What the board was not privy to is how fragile this deal with Kumho had become. The mayor, city-county commission and Industrial Authority did not want to snatch defeat from the jaws of victory so they reluctantly agreed to the new shotgun recalibration.
While the school board may pat itself on the back for this maneuver, they may not have another opportunity. The county and the Industrial Authority didn’t have to require Kumho to pay anything in lieu of taxes, thereby avoiding the school board altogether. We understand that the board was trying to make a point. Point made, but not the one they had wished. The school board’s shenanigans made a point with Kumho (they read newspapers, too). It made a point with the mayor, the city-county commission and the Industrial Authority. The point is, the school board was petty enough to risk losing 450 jobs and what will become a $600 million investment, over $150,000 annually. Real smart.