A complaint filed in Morgan County Superior Court challenges a May 25 vote by the Morgan County Board of Tax Assessors in support of PILOT bonds related to the Rivian electric vehicle plant.
The petition also objects to the determination that a rental agreement between the Joint Development Authority of Jasper, Morgan, Newton and Walton counties and Rivian Horizon LLC constitutes a usufruct.
What is a usufruct?
Most people have entered into one by simply signing a lease of five years or less unless the lease says otherwise. Under Georgia law, a usufruct is a relationship in which a property owner gives the tenant a limited right to the property for a fixed period of time.
A lease or extension of a lease of more than five years is assumed to be an estate for years.
Under that definition, there is no relationship between landlord and tenant because the owner has given the legal interest in the property to the tenant. That means, unless the property owner’s rights are harmed, a tenant has the right to use the property absolutely.
That distinction – according to the attorney representing Morgan County residents who are working to stop the location of the Rivian plant at Stanton Springs North – could be the difference in whether or not Rivian must pay $700 million in ad valorem taxes.
The petition – specifically a writ of certiorari – asks a Morgan County Superior Court judge to hear the case by elevating from the “quasi-judicial” authority of the Board of Tax Assessors.
Each assessor is listed in the complaint, along with the JDA, Walton County Board of Tax Assessors and Rivian Horizon LLC.
How we got here
Gov. Brian Kemp announced the location of a Rivian electric vehicle manufacturing plant with a $5 billion investment on 2,000 acres of mostly agricultural land that includes Morgan and Walton counties and the CIty of Social Circle. More than half of the land is located in Morgan County.
On May 2, the JDA, State of Georgia and Rivian entered into an Economic Development Agreement with terms outlining the EV plant.
As part of the EDA, the State of Georgia agreed to lease to the JDA all of the project site. The JDA then agreed to “rent the project” to Rivian under a rental agreement.
A section of the EDA states that Rivian is not required to pay ad valorem tax on its interest in the property, which hinges on whether or not the project is deemed to be a usufruct.
The vote by the Tax Assessors, which authorized the PILOT bonds – which stands for payment in lieu of taxes – would make the rental agreement a usufruct and not an estate for years, according to the EDA.
The petition states that, in an April 27 meeting, members of the public were allowed to speak to the Board of Tax Assessors. At the next meeting on May 25, the petitioners were denied the opportunity to speak, likely leading to the complaint being filed June 21.
The vote to approve the PILOT bonds passed 4-1, with the lone dissenter being denied the right to amend the motion.
Argument against a usufruct
The petition cites multiple examples against the rental agreement being determined a usufruct under Georgia law, beginning with the lease term of 25 years. The lease also can only be dissolved if Rivian so chooses.
The initial term of the lease runs through Dec. 1, 2027, with four options that would allow the lease to be extended for another 20 years. Those options are automatically renewed unless Rivian files a request to end the lease.
“In other words, the true term of the rental agreement is 25 years,” the petition reads. “Thus, a rebuttal presumption is created that the rental agreement constitutes an estate for years subject to taxation, and the burden is on the JDA and Rivian to prove otherwise.
Further, the rental agreement is not a usufruct, according to the petition, because Rivian is responsible for all construction on the property and retains full right to make changes to the property.
What the petitioners seek
The complaint states that the Board of Tax Assessors and its individual board members failed to properly fulfill their “quasi-judicial obligations by erroneously approving the PILOT agreement” and finding that Rivian’s interest under the rental agreement is exempt from ad valorem taxes.
Petitioners believe that the approval of the rental agreement causes them damage as Morgan County taxpayers because they will have to pay a bigger share of the tax burden of the county “than would otherwise exist if Rivian’s interest under the rental agreement were properly taxed as required by Georgia law.”
If the writ is issued, the petitioners request a hearing on the approval of the PILOT agreement and whether or not the rental agreement is a usufruct.
Attorney for the petitioners, John A. Cristy of Atlanta, said the complaint speaks for itself.
“We look forward to having the matter heard before the Superior Court and are confident in our analysis of the law and conclusion that the rental agreement is not a non-taxable usufruct,” he said.