§ 2-174. Commercial and industrial property rehabilitation incentive program.

(a)

Definitions. The following words, terms and phrases, when used in this section, shall have the meanings ascribed to them in this section, except where the context clearly indicates a different meaning:

Assessed value means the total appraised value of real property as shown on the tax digest of the county.

Base value means the total appraised value of a project as determined by the county's board of tax assessors (BTA) on January 1 of the year in which the rehabilitation or renovation of the project begins.

Commercial use structure means structures used for the selling or providing of goods or services to individuals, firms or corporations; provided that for purposes of this program, mixed use structures (used for both residential and commercial purposes) constitute commercial use only when the square footage of that portion of the structure used for the sale or provision of goods and services exceeds 50 percent of the total square footage of the structure.

Corridor study area means a select area of the county (as depicted in the exhibits to the ordinance from which this section is derived contained in the comprehensive plan appendix) for which staff has prepared a corridor study that has been adopted by the county board of commissioners. For the purposes of this article, the following are areas that currently qualify as corridor study areas: Atlanta Road, Canton Road, Veterans Memorial Highway including West Corridor, Powers Ferry Road, and Six Flags Drive. These areas can be modified and new areas can be added by action of the county board of commissioners via an official agenda item.

County means Cobb County, Georgia, a political subdivision of the state.

Development authority means the Development Authority of Cobb County.

Exemption amount means a percentage of the ad valorem property taxes resulting from the increase in the fair market value of a commercial or industrial use structure(s) directly attributable to the substantial rehabilitation and/or renovation of the structure as approved by the program.

Fair market value means the full 100 percent value of a property or portion of property as further defined by state law (O.C.G.A. § 48-5-2).

Incremental project value means that portion of the fair market value of the project directly attributable to the rehabilitation and/or renovation of the commercial use structure(s) or industrial structure(s) approved by the program; provided, however, that such fair market value shall be determined in the same manner, and with the same frequency, as other taxable similarly situated commercial and industrial properties by the BTA.

Industrial structure means a structure or part thereof used for manufacturing, processing, or assembling of material or manufactured products, or for research.

Owner means, for the purposes of this section, all persons or entities holding title (as referenced in the county's official tax records) to taxable real estate interests in commercial use structures or industrial use structures for which an exemption is requested.

Program means the Cobb County Commercial and Industrial Property Rehabilitation Incentive Program.

Project means a commercial rehabilitation project for a commercial use structure or an industrial use structure approved for the Cobb County Commercial and Industrial Property Rehabilitation Incentive Program by OED, BTA (exemption approval only) and the development authority.

Redevelopment authority means the South Cobb Redevelopment Authority.

Single project, for purposes of this section, means a project consisting of a single tax parcel which may include one or more buildings which is to be substantially rehabilitated or renovated within two years of the issuance of the initial construction permit following acceptance to the program.

Substantially rehabilitated or renovated commercial use structure or industrial use structure means an existing commercial use or industrial use structure, no less than 20 years of age (calculated from the date in which the original certificate of occupancy was issued), located in a corridor study area or included among those sites listed in the inventory of redevelopment sites (as shown in exhibits contained in the comprehensive plan appendix and considered a part of this article hereto), where the structure has been substantially rehabilitated or renovated so as to increase the fair market value thereof by not less than 50 percent of the base value as determined by the BTA. Such determination is not appealable. Renovation/rehabilitation consists of capital improvements and includes, but is not limited to, the installation of improvements to the building (including fixtures or mechanical systems), parking, and public infrastructure. Ordinary upkeep and maintenance shall not be deemed a qualifying improvement for purposes of this program.

(b)

Purpose. The purpose of this program is to encourage owners of older commercial use/industrial use property (20 years or more in age) in select areas and sites around the county (as depicted in the corridor study areas and the redevelopment sites specified on exhibits 1 through 6) to revitalize those properties. The definitive objective of revitalizing these areas is to contribute to economic growth by creating jobs and improving the county's tax base. Proposed projects must adhere to any specific architectural and/or design guidelines that may apply in these areas or sites.

If the type of work to be conducted meets the program's requirements, and the BTA approves the exemption for the proposed project, the BTA will approve a valuation schedule on those improvements for up to five years based upon an escalating percentage of the fair market value of the improvements (excluding the value of land), provided these new improvements increase the fair market value by at least 50 percent or more of the base value and does not propose an increase in square footage by more than 100 percent. This increase in fair market value, as determined by the BTA, must be a result of actual physical changes resulting from the rehabilitation or renovation and not a result of inflationary changes in the value of the property related to the state of the economy or other market forces. This determination of the BTA will be final and not appealable.

(c)

Program requirements.

(1)

Effective date of exemption amount. Only rehabilitative work performed after the approval of the application may be awarded an exemption amount under the program. In addition, any adjusted valuation schedule approved by the BTA is to begin on the next succeeding January 1 following the issuance of the original certificate of occupancy (C.O.) for the improvements. Initial and final inspections approved by the fire marshal and chief building official are required to obtain a C.O. The applicant must provide the BTA with a copy of the original C.O. In the event the applicant proposes to abate the property taxes derived from application of the board of education or municipal portion of the millage rate, said applicant must secure a letter of support from the office of the superintendent of the county school district and/or from the city manager/administrator in which the property is located.

(2)

Certification of age of structures. The structure being improved must be a minimum of 20 years old (calculated from the date of original construction).

(3)

Location of structures. An approved project must be located within the corridor study area or included among those sites listed in the inventory of redevelopment sites adopted by the county board of commissioners as may be amended from time to time.

(4)

Single project. Improvements must be the result of a single project. Building permits must be issued within a 120-day period from the time of acceptance into the program, and completed within two years from the date that the initial construction permit was issued. A copy of the initial construction permit must be provided by the applicant to the BTA.

(5)

Personal property and land value excluded; program terminates on sale. The program incentives, if granted, will not apply to personal property or the value of the land and will not apply retroactively to improvements made without prior OED and BTA approval. All program incentives terminate upon the sale or transfer of any portion/parcel of the project.

(6)

Timely payment of ad valorem property taxes. Applicant's property taxes must be current and paid on time for a minimum of three years and the applicant must have filed timely business personal property returns for each of the three years prior to making application for said exemption in order to be eligible to participate in this program. Applicant must submit evidence of compliance with the application.

(7)

Vacant land excluded. The program does not apply to new construction built on vacant land.

(8)

Demolition of existing structures. The program will apply to those projects in which the building is completely demolished and replaced by a new structure provided that the existing structure is at least 20 years old as of the application date and provided the difference between the fair market value of the existing structure and the fair market value of the new structure increases by at least 50 percent or more of the base value and does not increase square footage by more than 100 percent. This determination by the BTA is final and not appealable.

(9)

Single parcel ID. Separate applications must be submitted for each tax parcel in which the owner is seeking participation in the program.

(10)

Permits. Appropriate building permits, and any other local, state or federal approvals, must be obtained prior to work commencement. County permitting fees will be assessed improvements on a parcel by parcel basis.

(d)

Program incentive. Approved applicants will receive a program incentive in the form of an effective reduction in ad valorem property taxes equal to the exemption amount. The exemption amount, in a given year, is equal to a percentage of the amount of ad valorem property taxes otherwise due on the incremental project value. As further described herein, the exemption amount equals 100 percent of the ad valorem property taxes due on the incremental project value in the first year of the program and reduces annually over the five-year program (in increments of 20 percentage points) to 20 percent in the fifth year of the program until the full value of ad valorem property taxes are due on the incremental project value in the sixth year and thereafter.

The property tax incentive is made possible by titling ownership to the taxable assets into the name of the development authority or redevelopment authority (under state law development authorities are exempt from ad valorem taxes on real property) which in turn leases these assets back to private entity. Title to the property reverts to the owner/applicant immediately upon the end of the lease. In addition, the development authority or redevelopment authority issues taxable revenue bonds through a transaction commonly referred to as "bonds for title". Bonds are held by the applicant and not sold to the public. During the term of the lease, the applicant would be responsible for paying ad valorem property taxes on the "leasehold value" of the project improvements in the form of an effective reduction in ad valorem property taxes equal to the exemption amount resulting in a substantial reduction in the amount of property taxes which would be have been due if the property was owned outright (in fee simple) by the applicant. The value of the "abatement" adjusts and diminishes each year as the reversionary interest ripens and fully vests at the end of the lease term.

While the project is titled to the development authority or redevelopment authority under this program, subject to BTA approval, the total appraised value of the leasehold interest of the applicant in such assets will increase as the lease term progresses. The "applicable percentage" established for a project under this program will be for a period of up to five years and will start on January 1 of the year following the completion of the project. For the purposes of this section, the "applicable percentage" will be applied in the following manner:

Year 1: 0%

Year 2: 20%

Year 3: 40%

Year 4: 60%

Year 5: 80%

Year 6: Fully taxable

As an example, if an application is received on January 15, then the applicant must wait until the next calendar year for the abatement to take effect. If the base value, which excludes the land value, equals $1,000,000.00 and the total appraised value of the new improvements equals $500,000.00, then the total taxable value under the program would equal $1,000,000.00 in year 1 ($1,000,000.00 + ($500,000.00 × 0.0)), $1,100,000.00 in year 2 ($1,000,000.00 + ($500,000.00 × 0.20)), $1,200,000.00 in year 3 ($1,000,000.00 + ($500,000.00 × 0.40)), $1,300,000.00 in year 4 ($1,000,000.00 + ($500,000.00 × 0.60)), $1,400,000.00 in year 5 ($1,000,000.00 + ($500,000.00 × 0.80)) and $1,500,000.00 in year 6 and thereafter before accounting for any market fluctuations in values generally. Note: The total appraised value is subject to change annually.

Should the building proposed for rehabilitation be located in a corridor study area or listed on the inventory of redevelopment sites and also be located in an enterprise zone established by the board of commissioners, the applicant shall not qualify for both property tax incentives. The applicant may qualify for other incentives available through the enterprise zone but may only do so at the discretion of the county. This abatement program is not available to properties or projects within a tax allocation district (TAD).

The owner must submit a detailed list of their actual improvement costs to the office of economic development (OED) for review. All proposals must be reviewed with the chairman of the board of commissioners as well as the applicable district commissioner. The owner must also acknowledge that the valuation methodology approved by OED and BTA is expressly conditioned upon the owner's completion of the project as submitted and within the two years allowed under this program. The owner must further acknowledge that failure to complete or substantially complete the project, as determined by OED and/or BTA, will constitute a sufficient basis for the project to be revised or terminated. Should the project be terminated under this article, the owner will be liable for payment of taxes equal to the tax savings accrued during the project.

(Amd. of 2-24-09; Res. of 10-25-11; Amd. of 2-26-13; Amd. of 2-27-18)

Editor's note

The exhibits referenced above are not set out herein, but are available for inspection in the county offices.