The two agencies responsible for putting together deals to bring new jobs to Rome and Floyd County struck a historic deal this year.
The Rome-Floyd County Development Authority agreed to share payment in lieu of taxes fees with the Development Authority of Floyd County for the next three years.
Companies pay PILOT fees to a bond-issuing authority instead of paying property taxes. The program is used as an inducement to attract industries to the community.
As a constitutional authority the RFCDA collects the annual PILOT fees. Its attorney, Andy Davis, said constitutional authorities have a stronger legal status than a locally created authority and is considered “safer” for doing PILOTs.
“The courts have recognized those and protected those,” Davis said.
Projects impacted by the revenue-sharing arrangement include construction at International Paper, Mohawk, DermaTran, Syntec — and Bekaert, when the bond deal closes.
The two authorities will evenly split those PILOT fees.
The RFCDA issued the first revenue-sharing check, for $35,937.50, to the DAFC in November.
The PILOT fees can be used for a variety of purposes.
“They are used … for economic development in the community,” said Davis.
The fees have been used in the past to buy property, fund a speculative building and pay for environmental or geological studies prior to construction.
Most recently, PILOT fees have been used to pay for the environment and geological work needed to get the 100-acre tract on Ga. 53 and 140 certified as a Georgia Ready for Accelerated Development site.
“PILOT fees also have been used to promote the community in economic development circles,” Davis said.
Trade-offs for tax breaks
Ten firms are currently participating in a PILOT program through the Rome-Floyd County Development Authority. Bekaert will also participate once the bond sale closes for its $29 million upgrade.
F&P agreed to pay $19,375 annually from 2013-2022.
International Paper is paying $43,750 in fees for 2014 and 2015. The payment will jump to $74,000 through 2024.
Kellogg/Keebler pays $15,937.50 annually for years 2012-2021.
Lowe’s agreed to pay $78,125 annually from 2014-2022.
Mohawk is paying $19,375 annually from 2014-2020.
Neaton Rome pays $32,500 annually from 2013-2017.
Profile Extrusion pays $23,750 from 2012-2016.
STEMCO Rome pays $7,500 a year from 2014-2018.
DermaTran pays $8,750 annually from 2014-2018.
And Syntec will pay $9,681.28 annually from 2015-2019.
In exchange for paying those fees to the Rome-Floyd County Development Authority, the industries get a variety of tax breaks.
In eight of the 10 cases, the tax breaks are solely for the value of personal property — equipment and furnishings. The companies pay full taxes on the value of the land.
Lowe’s is getting its abatements on both the real property and personal property, while DermaTran’s abatement program is based strictly on the value of the real estate.
“Personal property depreciates at a much faster rate than real property,” said Danny Womack, chief appraiser for Floyd County. “The value that we begin with for personal property, by the time they actually start paying the property tax on that it could be a much reduced value.”
F&P Georgia is receiving a 100-percent break on county maintenance and operation taxes for the life of the $31 million in bonds. The exemption covers the personal property at the plant in the Floyd County Industrial Park off U.S. 27 South. The company is paying a full load of school taxes.
Kellogg/Keebler, STEMCO Rome and Syntec will also pay the full value of school taxes throughout their bond terms, based on the value of their personal property International Paper, Lowe’s, Mohawk and DermaTran have county ad valorem tax abatements, which are based on a sliding scale.
Similarly, IP, Lowe’s and Mohawk are paying school taxes that vary from year to year. Neaton Rome gets a 100-percent school tax break through 2015 but will pay full school taxes in 2016 and 2017. DermaTran and Profile Extrusion are paying 100 percent of school taxes throughout their bond issues.
Here are a couple of examples to consider. Lowe’s real and personal property was valued at $180,553,955 this year.
With taxes based on 40 percent of that figure, the company would have paid $633,167 in county maintenance and operation taxes this year. At the same time, the county school tax bill would have been $1,342,455. Instead, Lowe’s paid a PILOT fee of $78,125.
F&P Georgia’s personal property was valued at $24,686,582. Its county maintenance and operation tax would have been $86,571. Instead the company made a PILOT payment of $19,375. F&P did make a full school tax payment of $183,550.
International Paper’s personal property is valued at $39,139,757. With 10 percent abatement this year, IP paid $123,529 in county ad valorem taxes. The company received a 90-percent abatement for school taxes, which means it paid approximately $29,101 for schools.
While the local governments sacrifice tax revenue to recruit new industry or assist existing industries with their expansions, it is hard to place a dollar-value on the impact of the accompanying jobs.
Floyd County Commission Chairman Irwin Bagwell said the abatements are offered for legitimate business reasons.
“What we’ve done recently with IP, Mohawk and Bekaert, instead of granting 100-percent abatements, we have gone to tweaking them — whether it’s a higher abatement on the first couple of years and less on the back end or the other way around,” Bagwell said. “I think that has helped our financial position.”
The chairman said that abatements are necessary to help attract new industry and aid existing companies in keeping jobs here in the county.
“By tweaking the formula, I think it’s a win-win for everyone,” he said.
Lowe’s has created more than 600 new jobs. The International Paper expansion saved 460 jobs. The Mohawk decision to retrofit its plant on Lavender Drive saved another 230 jobs.
Bagwell said he believes there is still a role for both of the development authorities. Historically, the DAFC was involved in much of the early property acquisition, including the Floyd County Industrial Park off U.S. 27 near Georgia Highlands College. Bagwell noted that the county also has endorsed bonds for Darlington and Berry College.
Putting the full faith and credit of Floyd County behind certain bonds is one reason, according to Bagwell, that members of the DAFC are all political appointees of the County Commission.
The RFCDA includes the county chairman, the mayor of Rome, chairman of the Chamber of Commerce and chairman of the Greater Rome Existing Industries Association and three others appointed by the four constitutional members.
Bagwell said the revenue-sharing agreement might well lead to the DAFC becoming more involved in property acquisition in the future.