By Tia Lynn Ivey
Morgan County is poised to receive about $ 8 million dollars in tax revenue from Shire over a 10-year period, which is nearly double the amount originally projected. Shire is opening $1 billion-plus biopharmaceutical plant in Stanton Springs, was recently approved for another $85 million dollars in bonds to invest in the project. This added investment will increase the tax revenue generated for the four counties who hold a stake in Shire’s property taxes. Morgan’s share is 15 percent.
The tax revenues are projected to nearly double over the 10-year abatement period due to three changes, according to Andrea Gray, lawyer for the Joint Development Authority (JDA). “One, Shire’s additional investment of $85 million in the facility. Two, Shire’s payment of $2.5 million to the JDA to pay down its GEFA loan debt. And Three, Shire reallocated the projected value of real property and machinery and equipment. The original (2012) projections placed a higher value on machinery and equipment than real property. Machinery and equipment depreciate which reduces taxes over time. Now that Shire is able to assess its actual expenditures on the facility, it shifted the values to place a much higher value on real property, which does not depreciate. Ultimately the value of all property will be determined by the Walton County Tax Assessor’s office (Shire is in Walton County).”
Once the tax revenue is divvied up between the four counties (Newton, Walton, Jasper and Morgan), each county will distribute that money to the appropriate local governments.
“The current projections show that over the 10-year tax abatement period, Morgan County’s 15 percent share of net tax revenues totals approximately $8 million of which $3.4 million goes to the County and $4.6 million goes to the School District based on the current millage rates (the 2.5 percent commission to Walton County will come out of these revenues),” explained Gray, lawyer for the Joint Development County, a board comprised of Morgan, Jasper, Walton and Newton counties. “Tax revenues will commence the sooner of Shire’s receipt of FDA approval of the facility or January 1, 2020. Shire’s goal is to receive FDA approval in 2018. In year one of the tax abatement period, Morgan County’s 15 percent share is $102,642. Once the 10-year abatement period ends, the facility will be assessed at 100 percent of its value and taxed accordingly.”
On December 7, 2016 a bond validation hearing was held in the Morgan County Superior Court. Judge Wingfield approved an order validating the bonds. “Now that the bonds are validated they are not subject to future challenges. The JDA will now formalize amendments to the 2012 agreements with Baxalta (note that the bond transaction is with Baxalta US, Inc. which is a wholly owned subsidiary of Shire) to include the additional $85 million investment,” said Gray.
According to Gray, The Industrial Development Revenue Bonds issued by the JDA do not constitute a debt of the JDA or of the four Counties. “The bonds are issued solely to legalize the ad valorem property tax abatements offered to Shire in exchange for its agreement to locate in Stanton Springs, generate 1,500 jobs, investment $1.2 billion in the facility, and most recently, pay $2.5 million toward the JDA’s GEFA loan.”
“The bonds are payable solely from rent paid by Shire under a Lease Agreement. Shire will purchase the bonds (ie Shire will be responsible for paying itself which is why these bonds are also referred to as “phantom bonds”). The bonds have no economic substance.”