ECONOMIC INCENTIVES AND ABATEMENTS Presented to Georgia Association of Assessing Officials Seminar March 23, 2016 Daniel M. McRae Seyfarth Shaw LLP 404-888-1883 [email protected] danmcrae.com FACEBOOK LINKEDIN TWITTER http://facebook.com/danmcrae http://linkedin.com/ @McRaeDan in/danmcrae2 68 “Seyfarth Shaw” refers to Seyfarth Shaw LLP (an Illinois limited liability partnership) @2016 Seyfarth Shaw LLP. All rights reserved. GLOSSARY "Abatement" "Transaction State" ©2016 Seyfarth Shaw LLP 1 THE GEORGIA WAY • GEORGIA HAS 159 COUNTIES • SO, THERE ARE 159 WAYS THAT PROPERTY TAX "ABATEMENT" IS DONE IN GEORGIA • TAKE-AWAY • IT'S NOT REALLY "ABATEMENT" • THAT'S A MISNOMER ©2016 Seyfarth Shaw LLP 2 THE GEORGIA WAY • IT'S REALLY PROPERTY TAX SAVINGS • BUT IN THIS PRESENTATION, WE'LL CALL IT "ABATEMENT", TOO • JUST DON'T GET CONFUSED ©2016 Seyfarth Shaw LLP 3 THE GEORGIA WAY ANOTHER TAKE-AWAY • GEORGIA IS A "TRANSACTION STATE" • NO PROPERTY TAX ABATEMENT WITHOUT A TRANSACTION • Exception- limited zones under Georgia Constitution, for example: state enterprise zone, urban enterprise zone • Another exception- "freeport" inventory exemption ©2016 Seyfarth Shaw LLP 4 TELL ME WHY • A TRANSACTION IS REQUIRED BECAUSE OF THE STATE CONSTITUTION • "UNIFORMITY OF TAXATION" • NO "GIFTS OR GRATUITIES" FROM PUBLIC SECTOR TO PRIVATE SECTOR • ALSO WANT TO AVOID TAXPAYER SUITS OVER "SHAMS“ • THE GEORGIA SUPREME COURT RECENTLY LEFT STANDING FULTON COUNTY’S “RAMP UP” FORMULA FOR PROPERTY TAX INCENTIVES. SJN Properties LLC v. Fulton County Board of Assessors, 296 Ga. 793 (2015) ©2016 Seyfarth Shaw LLP 5 WHY BONDS ARE REQUIRED EXTRACT FROM A FULTON COUNTY BOND VALIDATION ORDER FOLLOWING THE SUPREME COURT’S DECISION ©2016 Seyfarth Shaw LLP 6 WHY BONDS ARE REQUIRED EXTRACT FROM A FULTON COUNTY BOND VALIDATION ORDER FOLLOWING THE SUPREME COURT’S DECISION ©2016 Seyfarth Shaw LLP 7 IT'S NOT JUST GEORGIA! NO SALES TAX EXEMPTION OCCURS IN GEORGIA ACTUAL TAXES APPLY IF LEASEHOLD VALUATION USED ALSO KANSAS and others ©2016 Seyfarth Shaw LLP 8 HOW IT WORKS ©2016 Seyfarth Shaw LLP 9