Every Georgia county has at least one obscure public agency like the one in Effingham that courted OpenAI in secret and granted it cut-rate property taxes.
But the state legislature that created these bodies has set them to work without many formal guardrails or local control.
Effingham residents critical of the OpenAI data center are finding that out now, in the footsteps of fellow Georgians in places like Troup County and Atlanta.
The goal for Georgia’s state and local economic development agencies is to propel “economic growth” and “public benefit.”
For the agencies, this generally means more jobs and a bigger tax base.
But left unmentioned are costs in money, in pollution, in public anger and distrust and the other kinds of economic growth or public benefit that might have otherwise been pursued.
The debate over tradeoffs and public benefit at development authorities doesn’t generally happen in public.
Each of Georgia’s probable 575 or so local development authorities runs a little differently, but there are commonalities, according to a 2022 bipartisan Georgia Senate study committee on the agencies. Generally, county commissions, city councils and a few school boards appoint development authority board members, but cannot remove them.
Lawmakers created Effingham’s development authority in 1968, back before anyone ever visited the moon. The legislature granted the authority 2 mills of property taxes every year — a privilege not enjoyed by counties, cities and schools that must hold annual public hearings on their millage rates. A county public referendum 58 years ago on the legislature’s action cemented these two mills into the state Constitution.
Most people have never heard of their area’s development authority or its sweeping powers to offer long property tax holidays, discounted land or free site preparation work and to work in confidential negotiations with companies.
“Local development authorities operate autonomously and their decisions are not widely known prior to project approval,” the 2022 study committee found. Sometimes even school boards, counties and cities are surprised to learn that the development authority has waived taxes the other agencies would normally collect.
There is little transparency in development authority operations, limited internal or external review of the agencies and no mechanism to address operational concerns, even as they are key to keeping Georgia “competitive” in attracting businesses, the senators found.
The committee recommended that state auditors undertake a performance audit of local development authorities, subject to necessary funding.
HOW DEVELOPMENT AUTHORITIES DISCOUNT TAXES
By the state constitution, Georgia and its local governments aren’t supposed to give away something for nothing to private companies. Such “gratuities” are banned.
But folks doing economic development in the state routinely complain that the gratuities ban puts Georgia at a disadvantage to other states where giveaways are allegedly legally easier.
So a complex and much-litigated workaround has been forged over the years to extend property tax breaks. A development authority will take ownership of a piece of land on paper, even though actual control of the land and buildings is in the hands of a company.
No report has been published.
Though they don’t have to, Georgia’s development authorities can think about a wide variety of factors when businesses come knocking. Earlier this year, Bryan’s development authority disengaged from negotiations with Westwin Elements, a company that stoked pollution fears and sought subsidised financing for construction of a nickel refinery. Bulloch County’s development authority won’t offer companies a break on their school taxes.
But no state law mandates evaluation of whether tax breaks make a difference to companies’ decisions to come to Georgia — or if other factors like workforce, laws and infrastructure are more important. Nor does the state publish statistics on whether the jobs that come with new companies pay well or employ local people or those who struggle to find work. Authorities don’t have to consider the pollution that new companies could bring.
For 12 years, Georgia’s GOP governors have boasted that the state is best for business. The work of local development authorities in wooing companies plays into this narrative, with its language of “competition” with other states to land companies. Chatham’s county development authority leader has repeatedly called it a “game.”
But it’s the state legislature, not local communities, by and large that decides what moves are available to development authorities in this game and what counts as a win.
The Current GA reached out to Effingham County’s state legislators for comment. We will update this story with any comments.
