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UPDATE: Authority Votes Down Tax Breaks for Hotel

Tax breaks—they’re not just for Caterpillar anymore.

The developers of a Hyatt Place hotel on Thomas Street in front of the Classic Center asked the Athens-Clarke County Industrial Development Authority for millions of dollars in tax breaks. While such incentives are generally reserved for major employers like Caterpillar,  the IDA also recently handed them out to Kroger for a new store off Highway 72 and Publix for its Eastside store.

But the IDA voted down the agreement—negotiated in secret over a six-year period—Thursday afternoon. Chairman Gus Burnum, Athens-Clarke County Commissioner Mike Hamby and Jeanne Westbrook voted in favor of the deal; Charlie Barron and David Hamilton voted against it.

Although the vote was 3—2, the motion failed because four votes are required for approval. Mike Morris and Jinx Patel were absent.

Hamby argued that such deals can stem the tide of businesses locating in Oconee County, robbing Clarke County of tax revenue. He recounted a story about meeting tourists at the Welcome Center who were forced to stay in Commerce because Methodists in town for a convention had reserved all the hotel rooms in Athens.

“In my mind, that’s money leaving this community,” he said.

But Barron said the hotel should be built with private financing, just like his business was. 

“If they think it’s so great to have a connecting hotel, that’s a business decision on their part to raise the money to do it,” he said.

Hamby noted that Barron had voted in favor of tax breaks for Kroger as well as a preliminary agreement with Hyatt, to which Barron replied, “I’ll rethink those opinions next time they come up.”

Public comment was not accepted, but Athens Area Hotel Association President Mike Waldrip circulated a letter from the group’s 14 members opposing the bonds and tax abatements, though not the hotel itself, and calling the deal unfair and unnecessary.

“To my knowledge, no hotel has ever gotten this kind of deal,” Waldrip said.

Under the agreement, the 188-room hotel’s owners would have had to pay 6.67 percent of the property taxes they owe in 2016, rising 6.67 percentage points per year up to 60 percent in 2024, then 100 percent in 2025. That’s a total savings of about $2.5 million on the $30 million hotel’s annual $400,000 tax bill over 10 years.

The agreement was contingent on the hotel investing $25 million and creating 60 full-time jobs by 2015, rising to $29 million and 75 jobs the following year. But no hotel employs 75 people full-time, according to David Dukes of Benson Hospitality, which owns the local Holiday Inn and Hilton Garden Inn.

The authority also considered issuing up to $30 million in bonds for the hotel in a leaseback agreement in which the IDA would finance the development through a private bank and lease it back to the recently formed company HP Athens LLC. (Important side note: Those bonds are not backed by taxpayers.)

HP Athens LLC representative Robert Small quickly left the meeting after the vote, and the lone person left (me) was asked to leave for an executive session, so it is unclear whether the Hyatt deal is scuttled or officials will try to pass it again with a full complement of IDA members.