A Georgia judge rejected an agreement that would have given Rivian Automotive a huge wealth tax break and tarnished the burgeoning electric truck maker’s plans to build a plant east of Atlanta.
Morgan County Superior Court Judge Brenda Trammell denied a usually routine request from a local government for confirmation of a bond agreement, ruling Thursday that the development agency that brought the case had failed to prove the $5 billion Facility, which is expected to employ 7,500 people, was “sound, reasonable and workable” as required by state law.
Trammell also ruled that under state law Rivian should be required to pay regular property taxes since it has control of the property it would lease from the development agency, undermining the reason the lawsuit was brought in the first place.
Rivian declined to comment.
The Georgia Department of Economic Development and a local development agency for the four counties that recruited Rivian said they were “disappointed and respectfully disagreed with Judge Trammell’s decision. They said they are not giving up on their plans and are considering an appeal.
“We remain undeterred in our efforts to bring high-paying American manufacturing jobs to Georgia and are currently evaluating all legal options,” the groups said.
The Irvine, California-based electric vehicle maker announced last year that it would build the facility on an 800-acre site in Morgan and Walton counties about 45 miles (70 kilometers) east of Atlanta along Interstate 20, transporting up to 400,000 annually to produce vehicles. Rivian, which also has a plant in Normal, Illinois, had hoped to break ground as early as this summer and begin production in 2024.
By retaining ownership of the property and leasing it to Rivian, local governments would exempt Rivian from what is expected to be $700 million in property taxes over a 25-year period, although Rivian has agreed to withhold $300 million in taxes during the period of paying taxes.
The property tax break is a key part of the $1.2 billion in tax breaks and incentives Georgia and local officials have offered Rivian to build a plant in the state.
The long-running maneuver circumvents a ban in Georgia’s state constitution on giving “benefits” to companies or individuals. If Trammell’s order, which mandates normal property taxes, is upheld, it could put other big tax cuts in jeopardy and discourage officials from using the tool in the future.
The state also plans to spend $200 million to buy and prepare the site. Rivian could claim a projected $200 million income tax credit and $280 million in sales tax credits for machinery and building materials. The state also plans to spend $90 million to build a vocational training center and train workers.
The judge found compelling the arguments of a group of residents who opposed development of the facility, saying it would affect their quality of life in a rural area that Atlanta’s urban sprawl is now encroaching on.
“It’s very fulfilling that we local citizens have been able to do so much research together to bring on board a great legal team and give us fantastic results like these,” said JoEllen Artz, president of opposition group Morgan Land, Sky & Water Conservation. Artz and other opponents intervened in the lawsuit to challenge the adequacy of the tax break deal proposed by a joint four-county development agency that helped recruit Rivian.
The company has encountered difficulties ramping up production in Illinois, and its once-buoyant share price has fallen as some key investors sold shares.
Trammell wrote that local and state officials did not appear to have factored in the higher cost of services local governments would incur or whether Rivian had the money to complete the project.
“Rivian’s cash reserves are rapidly drying up, raising serious doubts as to whether Rivian will be able to begin, let alone complete, the project,” Trammell wrote.