Dear Editor,

Georgia’s approach to economic development increasingly relies on legally sanctioned financial mechanisms that, while within statutory bounds, are ambiguous in nature and reduce public oversight. Three legal but questionable tools are phantom bonds, Payments in Lieu of Taxes (PILOT), and non-disclosure agreements (NDAs). 

Phantom bonds are “constructs from the clouds to get around the provisions of the Constitution” said Ed Wall during a GA Senate Hearing on Economic Development Reform in 2022. They are “Legal Fiction” debt instruments that allow private companies to use the exempt tax status of Development Authorities to secure deep property tax discounts that citizens and small businesses do not have access to receiving. Rather than being secured directly by property tax revenue, these contractual revenue bonds depend on anticipated future income or contractual commitments from the project sponsor. This approach enables municipalities to sidestep the usual voter-approved bond issuance process. By doing so, government can create funding while effectively issuing “phantom” debt––liabilities that are less visible on public accounts and therefore subject to less scrutiny, often completely under the citizen’s radar. 

Payments in Lieu of Taxes (PILOT) offer a legally defined alternative to traditional ad valorem property taxes. Under Georgia Code §36-80-16.1, economic development authorities may negotiate PILOT agreements in which the project sponsor commits to scheduled payments instead of full property tax contributions. These agreements are typically integrated into lease or development contracts, and often locked in through Phantom Bond Validation. By substituting automatic tax revenues with contractual payments, PILOT arrangements obscure the long-term fiscal impact on local municipalities, making it near impossible for the public to assess the true expense of these development projects. 

Non-Disclosure Agreements (NDAs) are standard tools designed to protect sensitive financial and contractual information. In the context of public-private economic development projects, NDAs frequently limit the disclosure of key details to the general public—including bond structures and the specific terms of PILOT arrangements. While confidentiality can be justified to protect proprietary or competitive information, use of NDAs in publicly significant deals can severely restrict transparency and damage public trust. This obscurity hinders comprehensive public evaluation of potential risks, expenses, and long-term benefits (if any). Such agreements between elected officials and private corporations are ethically dubious, reduce accountability to citizens, and further the disconnect between the voter and the politician. 

Conclusion: Through phantom bonds, PILOT payments, and NDAs, Georgia’s economic development projects have harnessed legal mechanisms that promote public-private, but ignore the voting public. Incentive packages create the “Done Deal”, but at the expense of fiscal transparency and public oversight. A careful review of these practices is necessary to prevent abuses of well intentioned programs and essential for ensuring that economic growth does not come at an unchecked cost to local accountability.

Chas Moore

Reform Advocate