After a lawsuit-driven delay, financing is beginning to flow for a major economic development deal between Georgia and electric vehicle maker Rivian.
The Georgia Office for Economic Development and the Joint Development Authority for Morgan, Walton Counties announced last week they closed on $5 billion of project revenue bonds and executed a rental agreement with Rivian, beginning major development on a new hub for production and sales for the company on a 2000-acre tract of farmland an hour east of Atlanta.
“It’s a great day in Georgia as we close and issue the bonds for the Rivian project. Renting the site to Rivian is the next step in delivering this generational opportunity,” GDEcD and JDA wrote in a joint statement issued Thursday. “Georgians in Jasper, Morgan, Newton, and Walton counties and beyond look forward to $5 billion in investment and 7,500 good-paying jobs that this innovative, American manufacturing company will bring.”
Bloomberg News
The plans were supported by Gov. Brain Kemp but faced legal challenges from a community group opposed to the facility’s construction almost since inception in 2021.
Those challenges, which opposed validation bonds key to the wider financing arrangement, were all but squashed in July after the Supreme Court of Georgia declined to hear an appeal filed by those local residents.
Under a lease-switchback agreement, Rivian will have access to a pool of $15 billion in bonds to bankroll construction of the factory and its infrastructure.
The company will then rent the new facilities from the JDA, property tax-free, in return for payments-in-lieu-of-taxes to surrounding counties over an initial period of 25 years, after which the company can choose to extend or purchase the facility by turning over the purchased bonds.
Thus far, Rivian has only been authorized to perform limited grading work on the land. Now with funds flowing, it can begin wider development on facilities for battery and vehicle production, industrial waste processing, a test track, regional staff headquarters, and the promise of wider improvements to surrounding municipal utilities.
Officials said in their statement Rivian would make good on its first $1.5 million PILOT payment upon bond closing.
“Per the Economic Development Agreement, Rivian will pay the greater of scheduled PILOT payments or property taxes on equipment each year,” the statement said.
The property will begin generating at least $1.5 million annually in PILOT payments or tax payments for the first six years, and then the annual PILOT payments/tax revenues increase significantly, starting with a jump to at least $12 million in year seven, the statement said, adding that over the 25-year abatement period, Rivian will pay at least $300 million in PILOT/tax revenue payments.
“Under the agreements, if Rivian exceeds its initial investment commitment of $5 billion, then the PILOT payments also increase based on a defined schedule in the agreement,” the statement said.
Rivian is now eyeing a start to major construction in early 2024 and the company said the plant would churn out around 400,000 vehicles annually at peak production and the project would directly provide up to 7,500 jobs.
Georgia has made inroads with the nation’s burgeoning electric vehicle industry, attracting billions of investments from companies seeking to solidify U.S. supply and distribution chains.
That includes economic development agreements with Hyundai for a $5.5 billion plant outside of Savannah as well as a more recently announced deal for a $5 billion battery plant backed by close to $700 million in state and local incentives.
Hyundai’s sister firm Kia also announced that it will begin production of the first electric vehicles at its existing plant in West Point, Georgia.