Rivian is not looking back yet. Georgia state officials, along with the local Joint Development Authority (JDA), are filing an appeal to overturn a Morgan County judge’s ruling denying $15 billion in bonds to fund construction of the new Rivian electric vehicle manufacturing plant in Morgan and Walton counties.
The explosive decision also invalidated the lease agreement between the state and Rivian, leaving Rivian responsible for paying traditional property taxes, reversing hundreds of millions of dollars in tax breaks for the California electric vehicle automaker.
On Friday, October 28, the Georgia Department of Economic Development (GDEcD) and the JDA of Jasper, Morgan, Newton, and Walton Counties filed a Notice of Appeal challenging the Morgan County Superior Court Judge’s decision. , Brenda Trammell, last month, who refused bail. validation and rental contract of the Rivian project.
The GDEcD and JDA are hoping the Georgia Court of Appeals will rule in their favor to fully restore Rivian’s lucrative incentive program that convinced the startup automaker to move to the Peach State. Prior to the denial ruling, Rivian was set to make PILOT payments (payments in lieu of taxes) for 25 years instead of paying traditional property taxes, on the grounds that the company’s lease agreement would be considered as a usufruct. A usufruct is a legal status that would have allowed the JDA to lease the property to Rivian without requiring traditional property taxes.
Instead, Rivian would pay the JDA at least $300 million over 25 years. But Trammell ruled that the terms of Rivian’s lease agreement with the state and the JDA could not qualify as a usufruct, leaving the company liable for traditional property taxes.
“We absolutely disagree with Justice Trammell’s decision regarding the incentive structure for this project, and we are confident in the merits of our appeal,” said GDEcD Commissioner Pat Wilson. “Rivian’s commitment of $5 billion and 7,500 jobs to the State of Georgia, as outlined in our binding economic development agreement, is a transformational investment for the community, the state and the country. The bond structure of this project is consistent with many other bond deals that have already cleared in this state and even in Morgan County.
Wilson accuses Judge Trammell of basing his decision on factors beyond his proper jurisdiction.
“The judge’s decision improperly considered and drew conclusions regarding Rivian’s finances. Additionally, the decision did not take into account Rivian’s large cash reserves and manufacturing performance at the company’s existing plant in Normal, Illinois, and the growing market trend toward electric vehicles. said Wilson.
Wilson argues that the state-negotiated incentive agreement for Rivian has sufficient terms to protect taxpayers’ investment in the historic economic development partnership with Rivian.
“Furthermore, this deal is not only one of the strongest the state has secured in terms of recovery, but to suggest that the state and local JDA failed to exercise due diligence is categorically false. before offering discretionary incentives,” Wilson said.
“The background work on Rivian was thorough and included a review of financial records and outlook to understand the impact of a potential project in Georgia. In addition to visiting Normal, we spoke to community leaders and business owners We have felt and seen firsthand the benefits Rivian has brought to this community, from education and small business growth to a revitalized downtown and increased overall opportunities for residents. In Normal, Rivian has become a partner in environmental education and conservation, and we look forward to creating a similar partnership in Georgia.
Wilson insists that all proper research regarding local impacts was conducted before signing on the dotted line with Rivian.
“In addition, the State and the JDA conducted due diligence to understand the impacts of the project on the direct and indirect jobs created (7,500 direct, 8,000 indirect) and estimated the significant amount of revenue that would be generated from these jobs. ($1 billion) and $300 million in PILOT payments over 25 years for a $5 billion investment. The first year payment is 18 times the taxes currently generated on the property,” Wilson said.
“With all of these tremendous positive impacts, our state and our communities are thrilled to bring Rivian, an innovative American manufacturing company, to Georgia to enjoy a successful, long-term relationship.”
The notice of appeal was filed with the Georgia Court of Appeals. Briefs will be filed after the case has been registered.
As part of Governor Kemp’s efforts to make Georgia the national hub for electric vehicle manufacturing and sustainable energy efforts, the state enlisted Rivian with lavish Peach State incentives to become the site of the start-up’s second factory. Until the announcement of the new Hyundai plant earlier this year, the Rivian deal was the largest economic deal in Georgia’s history. Rivian was offered a $1.5 billion incentive package with a range of state and local benefits, including free land, a state-owned training facility, state-funded roads State and approximately $700 million in local and state tax relief.
Judge rules against Rivian: $15 billion in bonds denied
But Trammell’s decision jeopardizes those promised incentives. In the 34-page decision issued Sept. 29, Trammell not only denied the $15 billion bond sought by the JDA on behalf of Rivian, but also determined that the electric automaker should not be exempt from traditional property taxes. , invalidating the rental agreement negotiated between Rivian, the State of Georgia and the JDA.
Trammell noted that during the bond validation hearing in July, the State of Georgia admitted that only a financial analysis of the Rivian project had been performed to determine the “rate of return” of direct state subsidies, not financial benefits to local communities in the four counties. represented in the JDA: Morgan, Walton, Jasper and Newton.
Trammell also noted that JDA Chairman Jerry Silvio said the JDA “did not perform any analysis to determine the increased maintenance, infrastructure, and payroll costs incurred by each affected county due to construction and operation of the Rivian project”.
These costs included the expansion of EMS, police, and other government services, as well as new road infrastructure educational services in local public schools.
Now, a higher court will review the case and decide whether or not the $15 billion bond should be validated for Rivian and whether or not the project is eligible for tax exemptions.
This is a developing story. Follow Citizen of Morgan County for the most upcoming updates on the ongoing Rivian dispute.