The ABC’s of a bond communication issue
It seems that the $52 million in Fayette County Development Authority (FCDA) industrial revenue bonds issued in December for Phase 1 of the Pinewood Atlanta Studios project came as a surprise to some local elected officials. To get a handle on who knew about the bonds and when, The Citizen posed those questions to outgoing FCDA President and CEO Matt Forshee.
The industrial revenue bonds (IRBs) totaling $52 million for Phase 1 of the Pinewood Atlanta development on the 288-acre property on Veterans Parkway and the adjacent Rivers Elementary School property, known now as the Pinewood Atlanta Production Centre, were issued in December. The bonds do not include the development of future phases on either site.
The 288-acre studio property was purchased in spring 2013, while the Pinewood Atlanta Production Centre was purchased in late summer 2013.
Asked if the county and city knew about the Pinewood bonds prior to their issuance in December, Forshee said, “I would like to think so, but I can’t prove to you that they did. If we have made a mistake as far as communicating that falls fully on me. And I take responsibility for that.”
Forshee last week announced his resignation from the FCDA and his intention to take a development job with Georgia Power Co. in the Augusta area.
Forshee noted that FCDA and developers were discussing tax abatement back in 2012, “and that’s before some of the commissioners were even seated.”
Forshee said notice is given for FCDA meetings, which are public meetings, though only a few citizens attend. Neither Fayette County staff nor commissioners usually attend the meetings, he said.
Forshee said bond attorneys handled the public notice required for the industrial revenue bond process.
“They manage it to make sure all the T’s are crossed and the I’s are dotted,” he said.
Meeting minutes from the May 30, 2013 FCDA meeting indicate that Project Stargate (the original name for the Pinewood Atlanta Studios project) was discussed, as it had been in a number of previous meetings.
It was during the May 30 meeting that those in attendance were told that FCDA and two attorneys were “investigating a structure for a $35 million IRB as part of our commitment to Project Stargate.” Along with board members and FCDA staff, the meeting was also attended by Peachtree City Council members Kim Learnard and Vanessa Fleisch.
In terms of the city of Fayetteville’s knowledge of the bonds, FCDA board member and Fayetteville City Manager Joe Morton said Mayor Greg Clifton knew about the bonds several months prior to the issuance. Morton said it was on Nov. 7 that he notified the council and all city department heads that the bonds would be issued.
Pertaining to the process and timing of IRBs, Forshee said the bonds have to happen in the year that construction occurs. Bonds are not always issued prior to the groundbreaking and project construction, Forshee added.
“In order for the ownership to take place and the development authority to be a title entity of that bond we have to take title by Dec. 31 of a given year. The property is always valued (by the tax assessor’s office) on Jan. 1,” said Forshee. “So that’s why you might see construction activity occurring in a calendar year but the bond not happening until the end. A lot of it has to do with timing and attorneys. With Pinewood specifically, it has been such a fast development project and so evolving.”
Forshee said the project in February was expected to be valued at $25 million. By the fall the project continued to evolve and the value of Phase 1 of the project had risen to $50 million.
“In the span of eight months the project had doubled in size,” he said. “And the bond has to be based on the value of the phase. So if we had issued a bond in February based on $25 million, we would had to have come back and issued another bond. We pushed it out to October to go through the paperwork to issue the bond, knowing that they were tweaking things and modifying things from that standpoint and knowing what the full size of the project for Phase 1 would be. So essentially, we were looking at the value of everything that’s anticipated to be delivered by January.”
Forshee said it takes 45-60 days to initiate and complete the bond paperwork, adding that the bond price can be modified during the process. October is about as late as the authority could wait given the holiday season that comes in the final months of the year, Forshee said.
So is it out of the ordinary to issue an industrial revenue bond without issuing a press release? FCDA has issued a number of industrial revenue bonds in recent years. The issuance of those bonds is not usually accompanied by a press release, said Forshee.
Forshee also cleared up another question pertaining to Pinewood Atlanta. It is one pertaining to sales tax revenues which will come from the Home Depot on the Pinewood Atlanta property. Those sales taxes will stay in Fayette County, he said.
Sales tax projections for 2014 show the school system receiving an estimated $363,700 and the county and municipalities splitting another $363,700. Those numbers are expected to increase dramatically in the coming years as the number of film projects increase.
“The whole reason development authorities exist in Georgia is for industrial development,” said Forshee. “That’s why they were created. We’re the only entity in the state that’s a conduit authority for industrial revenue bonds.”