SOCIAL CIRCLE, Ga. – Some Rivian opponents are asking a judge to overturn a board’s designation of the company’s future site as tax-exempt because they say it violates the state’s constitution and will compel residents to bear a “greater share of the tax burden”.
They also claim that the length of a lease agreement between the Joint Development Authority of Four Counties and Rivian for the site partly in Social Circle means it is taxable because it is legally referred to as an “estate” rather than a standard lease. or “usufruct”.
Seven opponents of the planned Vehicle Production and Training Center filed a lawsuit in Morgan County Superior Court on Tuesday, June 21, asking a judge to overturn a council’s approval of tax-exempt status and a four-county Joint Development Authority (JDA) Payment in Lieu of Taxes (PILOT) plan that was used to entice Rivian to move to Georgia.
Ironically, those filing the lawsuit include Rutledge resident JoEllen Artz, while the defendants include the Morgan County Board of Tax Assessors of which Artz’s husband, John, is a member.
Rivian plans a $5 billion production facility at the 2,000-acre site located in Social Circle and unincorporated counties of Morgan and Walton on the north side of I-20.
The state and JDA announced in March that the company would receive $1.5 billion in incentives to build in Georgia, including tax credits; state and local incentives totaling $1.28 billion; $198 million for improvements to state sites and roads and other projects and services such as a state-sponsored training center.
Construction is expected to start later this year and production will start in 2024. The plant will be designed to produce up to 400,000 vehicles a year, officials said.
The PILOT agreement requires Rivian to meet a number of performance goals, including the creation of 7,500 jobs paying an average starting salary of approximately $55,000 each.
A statement from the JDA, which includes Newton and Walton counties, said the “legal challenge is completely without merit.”
“Once again, this group of activists who do not represent the opinion and thinking of the majority of our community are attempting to sabotage a generational economic development opportunity,” the JDA said.
“This legal challenge will cost the taxpayers of Jasper, Morgan, Newton and Walton counties by engaging in frivolous legal action that will have no impact on the success of the project. The JDA looks forward to the grand opening of the project more late this summer.”
Attorneys for Rivian’s opponents, John Christy and Scott Peters, wrote in the review application that the Morgan County Board of Tax Assessors’ (MCBTA) recent ruling that Rivian’s interest in the property qualified as tax-exempt. tax was “based on a legal error in the interpretation of the rental agreement” with the JDA and “violates the petitioners’ rights” under the Georgia Constitution “to have their property taxed equally and uniformly with other properties located in Morgan County”.
“The plaintiffs will suffer damages by reason of having to pay a greater portion of Morgan County’s tax burden than would otherwise exist if Rivian’s interest under the lease were properly taxed as Georgian law requires it,” they wrote.
“The erroneous approval of the PILOT agreement and the erroneous determination that Rivian’s interest under the lease agreement constitutes a non-taxable usufruct constitutes an unconstitutional gratuity in violation of (the Constitution of Georgia).
“Despite the MCBTA and individual respondents’ ruling to the contrary, Rivian’s interest in the property clearly constitutes an estate for years – not a usufruct – thereby subjecting it to the payment of ad valorem tax.
“There are many terms of the lease that are inconsistent with the finding of usufruct. For example, the term of the lease between the JDA and Rivian exceeds five years, creating a rebuttable presumption that the parties intention to create an estate for years rather than a usufruct,” the lawyers wrote.
“Specifically, the term of the lease is effectively 25 years, with only an option for Rivian to terminate the contract earlier if it wishes.
“Section 5.1 of the lease agreement provides that the initial term will continue until December 1, 2027, and then provides four additional ‘options’ by which Rivian can unilaterally extend the agreement for another 20 years. These ‘options’ are automatically exercised. unless Rivian takes affirmative action to provide written notice of its intent not to extend the Agreement at least 60 days prior to the end of the then-current term.
“So these are not true extension options, but rather termination options running to the benefit of Rivian. In other words, the actual term of the lease is 25 years. Thus, a rebuttable presumption is created that the lease constitutes an estate for taxable years, and the onus is on the JDA and Rivian to prove otherwise.”
They said the seven petitioners are asking a judge to overturn the PILOT agreement and the MCBTA’s ruling that “Rivian’s interest under the lease is exempt from Georgia ad valorem property tax and the ‘personal property tax’.