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    Development Authorities Final Report

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    Zachary Hansen
    Development Authorities Final Report

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    Development Authorities Final Report

    Uploaded by

    Zachary Hansen
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    Development Authorities Final Report

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    Development Authorities Final Report

    Copyright:

    © All Rights Reserved
    Download as PDF or read online from Scribd
    Download as pdf
    4K views25 pages

    Development Authorities Final Report

    Uploaded by

    Zachary Hansen
    Development Authorities Final Report

    Copyright:

    © All Rights Reserved
    Download as PDF or read online from Scribd
    Download as pdf
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    GEORGIA STATE SENATE SENATE RESEARCH OFFICE ay ane FINAL REPORT OF THE SENATE DEVELOPMENT AUTHORITIES AND DOWNTOWN DEVELOPMENT AUTHORITIES STUDY COMMITTEE (SR 809) Committee Members Senator Max Burns, Chairman District 23 Senator Clint Dixon District 45 Senator Steve Gooch District §1 Senator Jeff Mullis District 52 Senator Elona Parent District 42 Senator Michael Rhett District 32 Prepared by the Senate Research Office, 2022 TABLE OF CONTENTS STUDY COMMITTEE CREATION, FOCUS, AND DUTIES... BACKGROUND. ve SUMMARY OF TESTIMONY AND DISCUSSION. ‘Mnsrivo One —Juy 2, 2022 (Stare CaPrroL, ROOM 450). ‘Masri Two - AUGUST 25, 222 (COVERDELL LHGISLATIVE Orvice BUILDING, ROOM 307), 9 ‘Murino Taxes. Novinustte 10, 2022 (Covenoe, LRcisL ative OFFick BUILDING, RooM 307). 14 \Mxerinc Four — Nove 17,2022 (CovERDEL, LEGISLATIVE OFFICE BUILDING, ROOM 307). [Marino Five~ Novant 90, 2022 (Covexpets Lacis.enve OFPick BUILDING, ROOM 307) ‘Murine Six Doane 16, 222 (CoveRDeLL Leats.anve Orr1ce BUILAING, ROOM 907) FINDINGS see RECOMMENDATIONS er . a2 FINAL REPORT OF THE SENATE DEVELOPMENT AUTHORITIES AND DOWNTOWN DEVELOPMENT AUTHORITIES STUDY COMMITTEE (SR #09). oe Page Lote STUDY COMMITTEE CREATION, FOCUS, AND DUTIES ‘The Senate Development Authoritios and Downtown Authorities Study Committee was created by Senate Resolution 809 during the 2022 Legislative Session ofthe Georgia General Assembly.! SR 809 notes: (1) Development Authorities reprosent critical tools for the development and promotion of trade, commerce, industry, and employment opportunities in Georgia; (2) the proporty of Development Authorities are generally exempt from taxation; (3) Development Authorities have issued billions of dollars in property tax abatements; and (4) there is litle eantralized, stata. wide aversight-or data gallaction menvding tha aparntions of these development authorities, ‘The Study Committee has been charged with a thorough study ofthe creation, operation, and managoment of Development Authorities. The Study Committee will addrees the conditions, nneods, issues, and problema related to Development Authorities, and develop recommendations for any actions or legislation needed to address any problems discovered related to development authorities. Senator Max Burns of the 23rd served as Clhsir of the Study Committee, The other Senate ‘mombers were Senator Clint Dixon of the 45th, Senator Steve Gooch ofthe Bist, Senator Jeff ‘Mullis ofthe 58rd, Senator Elena Parent of the 42nd, and Senator Michaol Rhett of the 33rd, ‘The Study Committee held four informational meetings and one committee discussion ‘meeting: July 22%, August 25, November 10%, November 17, and November 30%. The ‘committee heard testimony from the following individuals: ‘+ Kyle Hood, Chief Operating Otfier, Department of Community Affaire ‘Jackson Lilly, Rosoarch and Data Analyet, Department of Community Affairs Ba Wall, Piper| Sandler Dan Mefiae, Seyfarth Shaw LLP (lint Mueller, Legislative Director for ACC. Jeff Rader, DeKalb County Commissioner Sadie Keawery, Goorgia Municipal Assocation Angela Palm, Georgia School Board Association Bl Dorris, Kilpatrick Townsend & Stockton, representing Associated General Contractors of Georgia ‘+ Boni Thompton, chairman, Georgia Bzonomie Development Association; Development Authority Chair, Bulloch County ‘+ Chua Humphrey, Bxsoutive Director, Douglas County Development Authority ‘Don Bolla, chair, Development Authority of DeKalb County Dorian DelBare, President, DeKalb Development Authority ‘Tum Evan, Hall County Development authority ‘Anna Chafin, Chi Executive Ozer, Brian County Development Authority Misty Kondvic, president and CEO, Rome-Floyd County Development Authority ‘Jason Dunn, diretor Fitegorald and Bon Hill County Development Authority ‘Andres Schruijer, executive director, Valdosta-Lowndes County Development Authority So Ellen Artz of Morgen County ‘Totian Bene, former member of the board of directors of Invest Atlanta Dan Baskerville representing Dekalb County Schools "S160, 16 Gen Aang Sem Ga 2005.08 ‘Tho following legislative staff members were assigned to the Study Committee: Andrew Allison, Senate Press Office; Kaylee Maxwell, Senate Research Office; Ashley Thomas, Office of Senator Max Burns; Lindsay MeViear, Senate Budget and Evaluation Office, and Stuart Morelli, Office of Legislative Counsel. BACKGROUND Under Goorgia law, local government authoritios can currently be created in two ways: by general enabling act, and local laws.* Article IX, Section VI, Paragraph Il of the Georgia Constitution authorizes the General Assembly to ereate development authorities by general law to promote “the development of trade, commerce, industry, and employment opportunities.” Oneo the Genoral Ascombly authorizes the creation of an authority under general law, the governing body of the county or city must adopt a resolution declaring that there ia a need for an authority to function in the eounty or rity Currently, the Gonoral Assombly authorizes the crostion of the following authorities: + O.CG.A.§ 128-50 Regional Solid Waste Management Authority 0.C.G.A. §31-7-1 Residential Care Facilities for the Elderly Authority; O.C.G.A. §81-7-70 Hospital Authority; O.C.G.A. § 96-41-1 Residential Finance Authority; 0.C.G.A. § 86-42-1 Downtown Development Authority; 0.0.G.A. § 36-61-1 Urban Redevelopment Authority; 0.C.G.A, § 36-621 (General) Development Authority; 0.0.G.A, § 36-62-5.1 Joint Development Authority; O.C.G.A. § 36-63-1 Resouroe Recovery Development Authority; O.G.G.A. § 36-64-1 Recreation Authority; O.C.G.A. § 42-4-80 Rogional Jail Authority; and O.G.G.A.§ 48-4-61 Land Bank Authority, O.C.G.A. § 36-62-5.2 Regional Industrial Development Authorities Other authorities may be formed by local logislation, to create a single, unique local government authority.® Authorities may be ercated through this means even if there is a general enabling statute available. Historically, Georgia law permitted the ereation of Authorities by a constitutional amendment; however, this method of ereation is no longer available, though Authorities lawfully crested under that method ate still authorized.¢ Local and Joint Development Authorities Georgia law croates a development authority in and for each county and municipal corporation.* These development authorities consist ofa board of seven to nine directors who serve four-year terma.! While Georgia law creates these development authorities, no such ‘authority can transact any business or exercise any power until the governing authority declares through a rosolution thoro is a need for the authority and files the resolution with the Secretary of State.’ Regarding qualifications to serve on the board of directors, state law ‘nly requires Ural the dineclors:are taxpayers residing inthe county or municipal corporation ‘where the authority is created * Directors are not compensated for their services but must be ‘compensated for their actual expenses, and directors of county development authorities in i $Bcaa sa6en4 (GOA § soe) GOA tseuete FOGG §acazaen. Page date counties with a population of more than 950,000 must be paid a per-liem not to exceed the per-diem of members of the General Assembly.” Georgia law also provides for joint authorities tobe ereated by a joint resolution between (1) any two or more municipal corporations; (2) any two or more counties; (8) one or moro ‘municipal corporations and one or more counties; ot (4) any county in this state and any contiguous county in an adjoining state." These joint development authorities have their number of directors, terms of office, and residency requirements set by the activating rosolutions."! In addition to the powers of other development authorities, when two ar more ‘contiguous counties create a joint development authority, business enterprises within the ‘counties qualify for an additional $500 tax eredit for each now fulltime employee position created, O.CG.A. § 36-62-6(a) provides tho 17 enumerated powers of authorities created under ‘general enabling statute, Under this statute, authorities may borrow money and issue revenue bonds and bond anticipation notes to pay forall or part of any projet, ta eanty out the lawful purposes of the authority, and to pay all other eosta of the authority incident to oF necessary and appropriate to such purposes." Spocifically, tho authorities’ powers include: (1) to make and execute contracts and other instruments necessary to exercise the power of the authority; (2) to receive and administer gifts, grants, and devises of any property and to administer trusts; (9) to acquire personal property; (4 to dispose of any real property for fai ‘market value or any amount bolow fair market value ifn the best intavest of the authority; and (6) to expend for the promotion of industry, agriculture, and trade within the area of the authority. Additionally, Georgia law provides that development authorities, as well aa the property the authorities own or loase, are exempt from ad valorem taxation.!® ‘These authorities exist in perpetuity but may bo dissolved by resclution as long as the authority does not have eny outstanding unpaid bonds or bond anticipation notes. Downtown Development Authorities Georgia law creates a downtown development authority in and for each municipal corporation.!* Downtown development authorities are similar to the general development authorities above, except their focus is set by statute to he revitalizing and redeveloping the contral business districts of the municipal corporations of the state." These authorities consis ofa board of seven directors, who serve four-year terms.” While Georgia law creates downtown development authorities, no such authority can transact any business or exercise fany power until the municipality declares through a resolution there is a need for the authority, sets the geographic area which constitutes the contral business district, appoints the initial directors, and files the resolution with the Svcrwlaty of Slats." Regard $Ocaa §acm29 0. Occ Ye fine ares To cds oe nunc ofbons ae not by OCGA. § 98626 now Oeaas wes. wOceassoanie wOcaa gana WSwOeaag soi. NO. sez Pag bot 24 ‘qualifications, Georgia law requires each director to be a taxpayer residing within the ‘municipality or be an owner or operator of a businese within the downtown development area and a taxpayer residing within the country where the municipality les." Additionally, more ‘than half ofthe directors must either have ot represent a party with an economic interest in tho redevelopment and revitalization of the downtown development area. Futther, directors will not be compensated for their service but will be reimbursed for their actual expen incurred in the performance oftheir dutios.® O.C.G.A. § 36-12.8 (a) provides the 24 enumerated powers of downtown development authorities, Undor this statute, downtown development authorities may borrow money and 1e revenue bonds, notes, other obligations, leases, and other instruments to provide funding for borrowing money for authority projects. Those authorities have powers similar to those vested in the development authorities above, including (1) the development and promotion of contral business district, including making long-range plans oF proposals for the downtown area; (2) entering into contracts incident to or nocoseary for the lavful purposes of the authority; and (8) the purchasing, leasing, and selling of real and personal property. Similar to other development authorities, downtown development authorities and their property are also exempt from ad valorem taxes! ‘Training of Development Authority Directors State law requires directors appointed to Development Authorities to complete atleast eight hours of development and redevelopment training. State nw exempts directors who are also ‘members of the local governing authority from the training requirement. Among other providers, the Car] Vison Institute at UGA is available to provide the basic mandated ‘raining. According to their website, the basic training includes courses of instruction on the following topics: (1) legal issues; (2) ethies; (2) conflicts of interest; (4) open records and open meeting requirements; (5) the basics of financing Development Authority operations; (6) incentives; (7) bonds; (8) strategie planning in community development; (9) project development and management; and (9) emerging issues that affect Development Authorities, According to DCA, most directors receive their training through the Catl Vinson Institute, GMAVACOG, or the law firm Seyfarth Shaw. Development Authority Reporting Requirements Under Georgia law, any local government authority that is authorized under the state constitution o state Inw to issue bonds, including Development Authorities, must submit an annual report to the Georgia Department of Community Affairs (DCA) within six months of the end of its fiscal year This report must include the revenues, expenditures, assets, and is Sco sama SOGOA 43642421 (uel ewpent uteri 36427 downtown dln’ stort), I FOGGA sses16 ay 268016 debts of the authority and must describe actions taken by the authority to incur indebtednes DOA's website provides a form for annual authority registration and financial reporting Under Georgia law, joint authorities with established revenue sharing agreements and revenue emanating pursuant to uch agreement must- annually provide the state revenue commissioner and the state auditor with a statement identifying all real and personal property and property interests ofthe joint authority, nay encumbrances or liens on such property, a complete copy of all current agreements or contracts related to the joint authority, ‘and any additional information as determined by the state revenue commissioner or state auditor to be necessary to accurately detersnine Uwe net taxable digest of wach wnunty oF ‘municipality participating in such joint authority and any affected school district. The state revenue commissioner and the state auditor are authorized under Georgia law to conduct audits for joint authorities.” Further, Georgia Inw requires that “Each development authority shall provide to its respective county or municipal fiscal officer, as the case may be, an audited financial statement if such audit has been roquired by the respective county oF ‘municipality within six months of the end of the previous fiseal yeay."™ "a a not, pie oral ear 20, cl tories dew a ypting semen She sty aoa an oe reprint whys soe Go nee Soccon ¢aearsi. i OGA §sne2s0, he vp to ge SUMMARY OF TESTIMONY AND DISCUSSION Meeting One ~ July 22, 2022 ‘The Study Commitise hoard testimony from: ‘+ Kyle Hood, Chiof Operating Ofer, Department of Community Affairs; and ‘+ Jackson Lilly, Research and Data Anslyst, Department of Community Affairs ‘Tho Study Committee bogan with an overview ftom Kyle Hood, chief operating officer of the Department of Community Affairs (DCA), and Jackson Lilly research and data analyst with DCA, rogarding the logal history and current status of development aathorties in the state of Georgia During thie meeting, both the members of the Study Committee and the speakers expressed the ‘importance of development authorities a8 an economic development too throughout Georgi, ‘According to Mr. Hood and Me. Lilly, Georgia is home to 1,200 authorities overall, and 678 ofthese ‘authorities are a type of development authority. Mr. Lily provided that development authorities have historically ben ereated in three ways: through a constitutional amendment, passage of a local law through an act of the goneval assembly, oF the general enabling statute. While the erostion of new development authorities through a constitutional amendment is no longer authorized, those ‘uthoritios created thia way continuo to operate. Of the 75 registered authorities, DCA provided that 447 development authorities were created through the genoral enabling statute, approximately 75 were created through a local constitutional amendment, approximately 36 were rested through local Jaw and the method of ereation is unknown for approximately 17, Additionally, DCA provided data regarding the year of cretion of rogistorod authorities inthe last six years. This information shows that 28 authorities have been created since 2017, with nine of those being general development authorities, fourteen being downtown development authorities, and five being joint development thoritios. Mr Lilly provided that on average Give or sx authorities are crested a year with creation ates going back to 1961. (Mr, Lilly provided that DCA’s role regarding development authortion in ts the agency to which ‘authorities provide annual registration and financial reporting. Ae of fiscal your 2018, the anna registration and finance reporting requirements were consolidated into a single report. Local development authorities are required pursuant to the Local Government Authoriice Registration ‘Act"paseed in 1995, to register ennually with DCA. This regatration requires all authorities to provide DCA with their names and their typo of authority. Additionally, the authorities must provide ‘information relating to their board, auch as board members names training stat, the numberof fall or part-time employees, whether the authority has a full-time exceutive director, and links tothe staff wobsito. Additionally, pursuant to Code Section 36-818, lca authorities must provide a uniform chart ‘of accounts similar to how loel governments report thoi finances, including information on ast, liabilities, rovonues, exponsos, and bond issuances, Me. Lilly further provides that DCA tracks Whether authorities comply with reporting yequitementa, noting that compliance i defined as having the three most reconty completed Neca years" reports fled with DCA. He further provides that suthorities in compliance with annual reporting requirements are the most active authorities, a8 authorities are not authorized to incur debtor eredit obligations, nor are they authorized to aeas DCA funding programs unleasuntil they are compliant with registration. Additionally, Me. Lily provided that authorities issuing debt in excess of one milion dallas flea separate additional report with DCA and thet DCA annually publishes a report on statewide authority indebtednoas, DCA provided some recent data on the board and staf of development authorities, providing thatthe average number of board mombers is 7.04. Additionally, in fieal year 2020, 40 percent of boards ‘employed a fulltime director or CRO and the avorage number of fulltime employees was 2.81. Mr. Lilly provided that other authorities would have city or county employees fulfilling these roles, DCA, provided that an averaga of 77 percent of board mtembers had completed all of their required training which a usually etained through Seyfarth Shaw, the Carl Vinson Inativute of Goveruient through the Univesity of Georgia, or training provided by the Georgia Municipal Association or ACC, DCA additionally provided « summary of the financial information submitted in fiscal year 2020 in the table reproduced below, The total non-currontaesots and total operating revenues are an average for each authority ofthe below type. Active hond invunnoss and capital leases are statewide totale for registered authorities during that year Development 8.551.315 $497,406 Downtown Development $1,976,121 85246 Industrial Development $6005.92 $591,265 Joint Development $5576 668 $209.81 Payroll Developnent $6,765,392 $298,723 ‘Grand Total $5554308 338506 rm DCA aaditionlly provided a copy of the debt inmuance report from 2021, The document includes Information for all authorities that iseuod debt in an emount over one milion dollars and is not limited to development authorities. DCA provided that this report i available, in the format presented to the Study Commitee, through their website 25, 2022 (Cov jing, Room "The Study Committee heard testimony frm: ‘+ Ba Wall, Piper! Sandler Dan Melt, Seyfarth Shaw LLP; Clint Mueller, Legislative Director for ACCG; ‘eff Rader, DeKalb County Commissioner; Sadie Krawezy, Georgia Municipal Assocation; ‘Angola Palm, Georgia School Board Association; and Bill Dorris, Kilpatrick Townsend & Stockton, representing Associated General Contractors of Goorgia ‘The Study Committee first heard testimony regarding the state of current Georgia law concerning development authortica and the general operation of development authorities, Dan McRae of Seyfarth Shaw spoke to the Study Committee rogarding the logal framewerk and operations of evelopment authorities. Bd Wall, an investment banker and financial advisor with Piper Sandler, ‘spoke to the Study Committee lo provide iamight ints finance and operations associated with development authoritios. ‘Additionally, at this meeting the Study Committe heard from speakers regarding concerns about the operation of development authortios in Georgia. Cline Muellor, Legislative Ditootor for ACC, and ‘off Rader, DeKalb County Commissioner, spoke tothe Study Commitee regarding ACCG's position regarding development authortic, particularly reganting concerns related to inter-governmental relations. Angela Palm, Goorgia School Board Assocition, testified about the interaction between

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