(The Center Square) — A Morgan County judge has struck down a key component of a deal to entice an electric vehicle manufacturer to build a plant in Georgia.
Earlier this year, the Georgia Department of Economic Development and the Joint Development Authority of Jasper, Morgan, Newton and Walton counties announced a deal to give incentives totaling $1.5 billion to electric vehicle manufacturer Rivian Automotive. The company plans to build a $5 billion plant at Stanton Springs North along Interstate 20 in Morgan and Newton counties.
On July 8, Georgia officials filed a petition to validate $15 billion in taxable revenue bonds, which economic development officials planned to use to finance the Rivian project. Seven Morgan County residents subsequently filed a motion to intervene.
The deal between the state, the JDA and Rivian is a “bond for title” transaction, and under the arrangement, Georgia would lease the site to the JDA, which would lease it to Rivian for $1 per year. The company will make “payments in lieu of taxes,” which Social Circle and Jasper, Morgan, Newton and Walton counties would split.
During a July hearing, Andrew Capezzuto, chief administrative officer and general counsel for the Georgia Department of Economic Development, testified that a “bond for title” transaction “is a mechanism to obtain tax abatement for a private company for which there is no ability legislatively or constitutionally,” Ocmulgee Superior Court Judge Brenda Trammell wrote. Jerry Luke Silvo, chair of the JDA, also testified at the hearing, but Rivian officials did not.
“Taken together, each of these provisions of the Rental Agreement demonstrate that Rivian would possess an estate for years, rather than a usufruct (a legal term meaning the right to enjoy the use and advantages of another’s property),” Trammell wrote. “As such, its interests in the property and the Project would be subject to ad valorem taxation.
“The Sale language … also establishes that Rivian has control over the equipment, and a bailment was not intended,” Trammell added. “Therefore, Rivian has tax liability for the equipment of the project, as well.”
In July, Silvo testified that the JDA issued three previous revenue bonds for Stanton Springs projects, and a court upheld the bonds for one of the projects. However, there was no opposition to that bond validation, Trammell wrote.
State and company officials said the Rivian project will create 7,500 jobs with an average wage of $56,000.
Court records show that economic development officials did not consider Rivian’s billions in losses in proceeding with the deal. While state officials expressed some reservations about the deal and how Rivian would pay for its part, they changed their tune after the company’s IPO in the fall of 2021.
Additionally, the ruling shows that the JDA did not tap a third party to assess the financial viability of Rivian, which has lost billions of dollars. The state did not analyze the plant’s impact on local governments and their expenses.
“As the entire country is looking to revitalize and grow domestic manufacturing, protect American jobs, and secure the country’s economic independence, we are disappointed and respectfully disagree with Judge Trammell’s decision,” the state and the JDA said in a joint statement. “This is a transformational project for the people of this community, the State of Georgia, and the United States of America.
“We remain undeterred in our efforts to bring high-paying, American manufacturing jobs to Georgia, and are currently assessing all legal options,” they added. “The Joint Development Authority and the State intend to work with Rivian to move this project forward and see it through to completion.”
By T.A. DeFeo | The Center Square contributor