Facts concerning the sale of the property that is the current location of Toyota of Albany on Ledo Road in Lee County is raising questions with officials.
LEESBURG, Ga. — It was only a number on Lee County’s Fiscal Year 2013 budget proposal, a relatively small number in the overall $22 million budget.
But the majority of the $326,777 in debt service written into the budget proved to be the result of a business decision made by the Lee County Commission in 2002 that some say will continue to impact the county for years to come.
The county’s debt service includes a $261,230 payment on a loan taken to finance the purchase of 24.745 acres of land from late developer John Gay’s LEDO Properties Co. That land was purchased by the county for $3.65 million, or $147,504.55 an acre.
The purchase came at the height of Lee County’s expansion on Ledo Road and was seen as a strategic move for future development. The sale also neatly coincided with Gay’s “gift” of the Grand Island Club to the county.
Eight months after purchasing the 25 acres from LEDO Properties at a premium price, the Lee County Commission sold 8 acres of land to Fairway Toyota, now Toyota of Albany. A couple of facts about that sale, though, continue to puzzle officials today.
The county sold the 8 acres to Fairway for $1,120,000, some $60,036.37 less than its average price for the property. Even more puzzling was the decision to sell all of the Ledo frontage to Fairway.
“I reckon the county sold all that property to Toyota so that they’d bring their business here,” Lee County Commission Budget Committee Chairman Bill Williams said of the decision. “You can’t blame Toyota for making the deal; it was good business for them. But in the long run, I don’t think it turned out to be a very good deal for the county.
“If you look at the average cost per acre the county paid for the land and the cost to the Toyota dealership, that’s a significant loss. I don’t think that’s the kind of deal I would ever have been in favor of making.”
Left with a little more than 16 1/2 cares of property but no frontage onto a major thoroughfare, the county has been able to sell only one more parcel of the 24-plus acres it purchased from Gay. In 2007, the International House of Pancakes bought 1.234 acres of the land for $192,504. That sale was slightly more than the county’s average cost ($10,483.39 higher), but it did not take a significant bite out of the amount due for the land purchase.
And now the county has an annual $261,230 debt service payment it must make to pay off the $2.2 million owed on the property.
“I don’t see any way out of it other than to hope that property values go up and we get people interested in the land once the Westover Extension project is completed,” said Williams, a CPA who famously found a $1.6 million error in the county’s budget before he was even elected to the commission. “As it is, it will take us another 17 years to pay this debt off.”
The Westover Extension roadway will run adjacent to the county-owned property, offering hope that its value will increase as expansion starts north of Ledo.
Lee Economic Development Authority Director and Chamber of Commerce CEO Winston Oxford said interest shown in the land by businesses considering a move into Lee County indicates the property is likely to sell somewhere in the $70,000 to $100,000 per acre range. He notes that a “big-box” developer had recently obtained an option on 10 of the acres for $100,000 an acre, but that development fell through at the 11th hour.
“I think that’s about the best the county can hope for,” Oxford said. “Unless land values increase significantly, I can’t imagine getting (the $147,504-per-acre the county paid) for that land.”
Governmental entities often offer incentive-laden deals for businesses to locate within their borders, reasoning that tax revenues will offset initial losses. A check of the website qpublic.com, however, shows that the Toyota dealership has not paid ad valorem taxes since it located on Ledo Road 10 years ago.
Oxford, however, said there was no sweetheart deal that left the property tax-exempt.
“The Toyota dealer financed that property using Industrial Revenue-type Bonds,” the Development Authority head said. “Those kinds of bonds may be issued by local, state and federal authorities and offer no risk for the authority that issues them.
“The person or business utilizing the bonds goes to a bank or lending institution and for a small amount of money gets credit approval. Once approved, (in this case) the Development Authority issued the bonds, which were then purchased by the bank. The Development Authority becomes nothing but a conduit.”
Oxford said there are two significant incentives for businesses to finance purchases through Industrial Revenue Bonds.
“For the lender, interest on the bonds is federal and state income tax-free,” he said. “Plus, I can give you an example of how this works: I financed a car dealership in Americus and was approved for the bonds. I got 15-year financing for 70 percent of prime, where the best I could have hoped for otherwise is — if I had a AAA credit rating — the prime rate.
“Also, while it is illegal in the state of Georgia to offer abatement of local property taxes, the only way to do it is through Industrial Revenue Bonds. It only makes sense, though, if the savings are greater than the legal expenses. It can cost $48,000 to $50,000 initially and another $80,000 to $90,000 in closing costs.”
While Albany-Dougherty Economic Development Commission Director of Marketing and Existing Industries Barbara Rivera Holmes could not confirm Friday whether the Albany Ford Town dealership used similar financing when it was being courted by both Dougherty and Lee counties, as has been suggested, she did say the utilization of such incentives is common practice.
“Incentives — which come in many forms and from a variety of sources — are often used in negotiations with new companies as well as existing companies when new jobs and new investments are promised,” Holmes said.
Oxford noted that the local Toyota dealership’s bonds were purchased to cover a 10-year period, which will end this year.
“At the end of this year, title of that property will be transfered from the Development Authority of Lee County to Toyota of Albany,” he said. “And on Dec. 31 of 2013, the dealership will start paying taxes on the land.”
The county, meanwhile, can only hope the Westover Road Extension project will stimulate interest in the 15 acres it still owns.
“We can hope real estate prices will go up, but that’s a lot to hope for,” Williams said. “(Tifton car dealer John) Prince paid $100,000 an acre for the land he bought (on Ledo), and that’s land with frontage. And the way the economy is going right now, there just aren’t many people buying.
“We just have to face it. Unless something happens, we’ll be stuck making that $262,000 payment from now on.”