Development Authority of Fulton County – AGG Helps Drive Mercedes Headquarters Deal

Challenge

Mercedes-Benz USA wanted to move its corporate headquarters from Montvale, N.J., to metro Atlanta, where Delta Airlines, Porsche Cars North America, Home Depot, United Parcel Service, Newell Rubbermaid and other companies have their headquarters. Mercedes was eyeing Sandy Springs, an affluent city on the north side of Atlanta in Fulton County. But it wanted to know what financial incentives were available if it worked with the Development Authority of Fulton County. The project would provide significantly more tax revenue to the county and Sandy Springs and add to metro Atlanta’s corporate headquarters prestige. Arnall Golden Gregory attorneys, representing the Development Authority, negotiated with Mercedes’ representatives.

Approach

Arnall Golden Gregory attorneys drafted a financing summary, including a description of the tax-incentive package that the Development Authority could provide. It was critical that this work remain confidential until an agreement was in place and could be announced. Under the Development Authority’s 10-year tax-incentive structure, the Development Authority takes title to the 12-acre site and leases it back to Mercedes, which is taxed at a lower rate as a leaseholder. The first year the property is assessed at 50 percent of the value of the fee interest, and the tax reduction decreases 5 percent each year over the 10-year period, at which time Mercedes takes title to the property and is obligated to pay 100 percent of taxes. The tax incentives are imbedded in a taxable bond issue, which in this case ended up being $110 million. After the Development Authority approved the inducement resolution, Arnall Golden Gregory negotiated with Mercedes’ bond counsel, drafted certain bond transaction legal documents, and appeared before both the Board of Tax Assessors to secure approval of the tax agreement and a Fulton County Superior Court judge to seek judicial validation of the financing.

Result

Mercedes new 250,000-square-foot headquarters, near the headquarters of UPS and Newell Rubbermaid, will employ approximately 800 people and add $12 million to $15 million in new taxes over the tax-incentive period. In addition, two developers are planning to build hundreds of homes and retail adjacent to the site.