A very good write-up by Mr. Larry McSwain w/ Citizens for a Better Newton
(Covington, GA - Newton Co, GA)
UNPACKING THE AMAZON DEAL- The "amazing" details that reveal why the City of Covington may consider cutting property tax ! But, don't expect one by the county or school board!
Recently, local newspapers have described the agreements with Amazon negotiated by the Newton Industrial Development Authority (IDA) on behalf of local governments. Amazon plans to construct a reported 1.4‑million-square-foot data center on a 430‑acre site on Alcovy Road within Covington’s city limits. Most reporting has emphasized the positive economic impacts of the project. The mayor of Covington has even suggested that city property taxes could be reduced because of the anticipated new revenue. In addition, Amazon has committed $100 million up front for new water‑reuse infrastructure to mitigate the project’s impact on our local water supply.
At first glance, the project appears to offer substantial benefits. However, it is difficult for citizens to fully evaluate the deal because the agreements are complex and not easily understood. To its credit, the IDA provided detailed documentation, including charts and verbal explanations, that allow a closer look at the numbers. What follows is one citizen’s assessment of that information.
Over a 16‑year period, the IDA will collect $301 million in lieu of taxes (PILOT fees) in addition to the $100 million water infrastructure investment. The water funding supports local conservation goals through water reuse while also enabling Amazon to obtain the 1.9 million gallons per day it will need for cooling. Thus, Amazon’s water investment is mutually beneficial.
The $301 million in PILOT payments, while significant, replaces traditional property taxes that would otherwise go directly to the city, county and school system. Under Georgia law, the IDA must legally own the facility and lease it back to Amazon for this arrangement to apply. If Amazon were paying full property taxes, the IDA estimates that $530 million would be collected over the 16-year period. That means Amazon will save about $229 million in taxes, or roughly $129 million if the $100 million water investment is considered.
The IDA will distribute the $301 million according to its own formula. The city of Covington and Newton County will each receive $99.5 million (45% each), the Board of Education (BOE) $13.3 million (6%), the IDA $6.6 million (3%), and the Newton Water and Sewerage Authority $2.2 million (1%).
Although these amounts are sizable, they are well short of full payment of property taxes over the 16 years. Covington benefits the most, as its projected property tax revenue would be only slightly higher at about $111 million. In addition, the city will receive $215 million more in franchise fees from the electric utility serving Amazon. No wonder the mayor is so optimistic about a possible tax reduction for city residents!
Newton County and especially the BOE fare much worse under the PILOT distribution formula so don’t expect any tax reductions from them. Based on normal property tax distributions, the county is estimated to forfeit approximately $49 million, while the BOE stands to forego an estimated $257 million (my estimates). Obviously, the IDA did not think Amazon’s creation of only 285 new jobs would have much impact our school system. However, from a broader perspective, any time new industries do not pay appropriate property taxes, the deficit falls on private property owners. With such decisions by development authorities, senior citizens have little hope of seeing a reduction in school taxes.
Perhaps the most troubling aspect is the decision‑making process itself. The five‑member IDA board apparently determined the distribution of PILOT funds without formal representation from the BOE and without a public vote by it or our county commission. While the IDA likely had good intentions, decisions that so directly affect taxpayers should, in my view, be made or at least formally approved by duly elected officials. Even if negotiations must be confidential, final approval should take place through public votes by elected representatives of all affected government entities.
Citizens who share these concerns should communicate them to local officials if they want greater transparency and accountability in future development decisions.
Larry McSwain
Covington