Local opposition to the $5 billion Rivian factory project came through successfully during the validation of a $15 billion bond for the landmark economic development deal last week, postponing a final decision on the issue until after August 18.
The Joint Development Authority (JDA) of Jasper, Morgan, Newton and Walton Counties filed the $15 billion bond validation petition on behalf of Rivian with Morgan County Superior Court on July 8. On Thursday, July 28, Superior Court Judge Brenda Trammell held a hearing in which the JDA and state officials testified in favor of validating the bonds, while opposition attorney John Christy stepped in as an objector to the bond validation request, presenting evidence in court, arguing that the $15 billion bond should be denied.
Anti-Rivian opponents are hoping to thwart the bond validation in order to completely derail the promised 16 million square foot electric vehicle manufacturing plant atop a 2,000 acre site in Morgan and Walton counties. The $15 billion bond is the cornerstone of Rivian’s incentive program offered by the state of Georgia.
Judge Trammell gave the JDA 14 days from the date of the hearing to file briefs in response to Christy’s claims. Christy will then have 7 days to file a response to the JDA’s upcoming briefs once filed with the court. Trammell will consider all of the evidence presented at last Thursday’s hearing, as well as upcoming briefs from each side, before issuing a final decision expected sometime after August 18.
During last Thursday’s hearing, Christy argued that the JDA and the State of Georgia failed to meet the burden of proof that the Rivian plant and the bonds sought to fund the historic project would serve the best interests of the four counties concerned.
“The JDA is required to prove that the issuance of the bonds is sound, reasonable and feasible and that it promotes the public good and general welfare,” Christy said after the hearing. “They also have to prove that the rental contract is a usufruct, which they have not done either.”
A usufruct is a legal status that allows the JDA to lease the property to Rivian without requiring traditional property taxes.
In addition to challenging the posting of the bond, Christy also filed a writ of certiorari asking Judge Trammell to overturn the Morgan County Board of Tax Assessors’ approval of the JDA rental agreement with Rivian, which exempts the electric automaker to pay traditional estate taxes and instead calls for PILOT payments to the JDA over a 25-year period. Under this lease, Rivian’s reduced tax bill would amount to at least $300 million over 25 years. Christy argues that Rivian should not be eligible for usufruct status that allows PILOT payments instead of full-rate property taxes.
But the JDA argues that the usufruct model and bond validation are “standard” practices for large-scale economic development projects sought by the state of Georgia to create well-paying, quality jobs and generate revenue. important to local counties.
“This action is common in Georgia and standard procedure for projects such as this and others in Stanton Springs and the four counties,” a joint JDA statement said ahead of Thursday’s hearing.
After the hearing, the JDA undertook to provide Judge Trammell with additional information to support his request for posting of the bond in the belief that Rivian’s development will continue to move forward.
“We will provide additional information to assist Judge Trammell in her decision,” JDA spokesman Ben Sheidler said. “With broad community, regional and state support, we are thrilled to make this project a reality bringing thousands of well-paying jobs to the community.”
According to Christy, he argued in court that the JDA and state officials had failed to study the potential negative impacts of Rivian’s development on the four counties and submitted the heavy financial losses recently announced publicly by Rivian this year as proof that the company could go bankrupt while the four counties would be left with maintenance bills for all the infrastructure built to house the Rivian plant.
“We’ve produced numerous publicly filed Rivian financial statements into evidence, and that’s not good,” Christy said. “Rivian had a net loss of $1.593 billion in the first three months of 2022. That would be $6.4 billion if annualized.”
Christy further warned that local taxpayers could be responsible for the maintenance costs of infrastructure extensions needed to support the Rivian plant.
“If Rivian goes bankrupt, the counties would be saddled with all the costs of maintaining the infrastructure that was created to support the Rivian plant: schools, sewers, water, storm water, roads, EMS, fire stations , etc. The state will provide some of the money for the initial construction of these features, but they will not pay to maintain them.
However, the JDA insists that the deal with Rivian put in place guardrails to protect the four counties in the worst-case scenario of Rivian going bankrupt after building a huge industrial manufacturing plant. The JDA also argues that only Rivian is responsible for repaying the bonds, not the JDA, local ratepayers, or the state of Georgia.
“The JDA is seeking to issue up to $15 billion in industrial development revenue bonds for the Rivian project. Georgian law requires that all tax liabilities be validated through local judicial process, and the JDA filing was made to comply with this requirement. These bonds are not a debt of any county, state or JDA. Rivian is solely responsible for repaying the bonds through lease payments to the JDA,” Shiedler explained.
The JDA points to the “clawback” period outlined in Rivian’s agreement, which states that if Rivian fails to meet 80% of its investment and job creation promises by the end of 2028, or continues those goals through 2047, financial penalties will be levied against Rivian in addition to the $300 million in PILOT payments.
“The bonds are payable solely from the rents paid by Rivian to the JDA and Rivian is the holder of the bonds, which means that Rivian bears the risk,” Sheidler said in an interview with the Atlanta Journal Constitution (AJC). “If the project does not materialize, in addition to the clawbacks that Rivian will have to pay, the JDA and the state would have the option of marketing the project to another user.”
According to the AJC, “To come to Georgia, Rivian was offered a $1.5 billion package of state and local incentives, including free land, a state-owned training facility, a new interchange along I-20 and approximately $700 million in local and state tax relief It was the largest such agreement in Georgia’s history until last month, when Hyundai has been offered $1.8 billion in similar incentives to build its electric vehicle plant near Savannah.
Christy represents seven Rutledge residents opposed to the bonds and the Rivian project as a whole. JoEllen Artz, one of the leaders of the local anti-Rivian movement, released a statement after Thursday’s three-hour hearing.
“We are very pleased with today’s outcome and delighted that our concerns have been expressed so well by the legal team… Sworn testimony from Jerry Silvio, President of the Four Counties JDA, showed that few or no consideration had been given to the future viability of Rivian by all JDA members or those working with the JDA,” Artz said.
“And if, as many Wall Street analysts and some media have predicted, Rivian fails in the near future, the community will be left with a wiped out landscape, along with the responsibility to maintain the additional infrastructure that will be needed, without the aide Silvio and the state GDecD representative both admitted, under oath, that no community impact assessment had been carried out, to determine what the cost/benefit to the communities would be concerned with the cost of additional emergency services, road construction and maintenance, or the cost of additional schools and teachers for either county. They testified to what we have known since Although the JDA claims that this plan and bond application are “sound, workable and reasonable,” no evidence exists, nor has been presented today, to show that this is true.
Christy is banking on Rivian pulling out of the landmark economic development deal with Georgia if the $15 billion bond is declined later this month.
“If there are no bonds, they can’t build the factory because they can’t get the money to build the factory,” Christy said. “It’s hope.”
But the JDA is looking ahead, confident the Rivian plant will begin construction later this fall.
“While we await Judge Trammell’s decision, we will continue to push the project forward as we prepare for a grand opening in September,” Sheidler said.
