The tiny city of Hapeville has launched a legislative salvo against its most powerful corporate neighbor: Delta Air Lines.
Hapeville leaders say Delta is lawfully leveraging a tax exemption to avoid paying millions in hotel-motel taxes, but it’s unfairly burdening the city’s residents as a result. Lawmakers sympathetic to the city, which sits on the northern edge of the world’s busiest airport, have introduced a bill at the state Capitol to try to eliminate the “loophole.”
A Delta spokesperson told The Atlanta Journal-Constitution that the company “values our long-standing relationship with the city of Hapeville, and we are in full compliance with state and local laws regarding hotel occupancy regulations.”
The lost revenue didn’t single-handedly force the city to raise property taxes in 2024, but it was a “major contributing factor,” Hapeville Mayor Alan Hallman told the AJC.
Hapeville, which spans 2.5 square miles and has only about 7,000 residents, had to raise its millage rate by about 2 mills — nearly $250 more for the average homeowner’s bill.
The foregone hotel-motel taxes would have covered about three-fourths of that, Hallman estimated.
That plus Fulton County’s recent increase, he said, means “Our poor residents are drowning in tax debt.”
Since COVID-19, Delta has increased its employee training at its headquarters, which is nestled between Hartsfield-Jackson Atlanta International Airport and Hapeville city limits, City Manager Tim Young told the AJC.
The carrier started renting more large blocks of rooms at Hapeville hotels across the street to house those trainees as they cycle in and out.
Credit: AJC FILE
Credit: AJC FILE
Given that those long-term blocks count as stays over 30 days booked by one customer, the company has met a legal threshold and has been avoiding the 8% county and municipal hotel-motel tax, he explained.
The Delta spokesperson added the company has invested in “considerable” security upgrades to local hotels and is “proud to provide consistent, year-round business to Hapeville hotels, which brings significant benefits to the city including increased spending at local businesses.”
The bill’s sponsor, state Rep. Clint Crowe, R-Jackson, told the AJC, “I want to be clear that Delta is acting within the law and this is not to target them.”
The exemption on 30-day hotel stays has a purpose — mainly to help people who need long-term lodging because of personal circumstances.
“This is to keep the hotel-motel exemption effective in doing what we had intended, but not put an undue burden on anyone,” he said.
Between 2022 and 2024, data provided by Hapeville show this added up to nearly $5 million in foregone hotel-motel tax revenue.
Last year alone the foregone revenue was nearly $2.2 million. That’s a dramatic jump from 2018, when it was just under $440,000. (Hapeville’s budget last year was about $18 million.)
One hotel in particular, the Hilton Atlanta Airport, made more than half its December 2024 revenue from nontaxable stays over 30 days, the data show.
Simultaneously, the city’s costs have gone up — just as many others across the state and country, Young said. As Hapeville City Attorney Andy Welch testified in a state House subcommittee, the city must still provide expensive fire trucks with ladders tall enough to reach the multistory hotels.
While Hapeville is dealing with a unique situation right now, Welch cautioned lawmakers that nothing is stopping other companies and LLCs from leveraging the exemption in the same way in other communities.
‘We didn’t see any other path’
Hapeville first flagged the possible issue to Delta in 2022, but raised it again as a dramatic problem this year, Young said.
After getting little traction with the company, he said they were left with no other option than to drop the bill, which would eliminate the loophole for use by for-profit companies.
The statewide cities association, Georgia Municipal Association, and counties association, Association County Commissioners of Georgia, are both supporting it, as well as the Georgia Association of Convention and Visitors Bureaus.
Hallman cautioned he isn’t trying to “bash” Delta, but: “We didn’t see any other path, quite frankly.”
“It’s become something that we could no longer sit back and watch because the cumulative effect of this is going to be dramatic,” he said.
The intent of the 30-day-plus loophole was to support people needing long-term rentals “for whatever reason, maybe their house burned down,” said ACCG lobbyist Dante Handel.
Delta or another company renting out room blocks for long periods of time, is “a pretty unusual situation,” he said.
Hallman said he understands Delta’s interest in making a profit. The company made $3.5 billion last year.
“I’m fine with them showing a profit. By the letter of the law, they’re not doing anything wrong,” Hallman said.
But Hapeville, he explained, has little other industrial tax base after a Ford assembly plant shut down.
The headquarters of Porsche Cars North America and its Porsche Experience Center, its other prominent business resident, is actually mostly within Atlanta city limits, which dents its tax benefits to Hapeville.
As a result, these hotel-motel dollars are a crucial revenue stream, and Delta using up the rooms prevents the city from earning any other revenue from them.
While the bill passed out of a Ways and Means subcommittee with bipartisan support, it did not move to a full committee vote in time for a key legislative deadline Thursday. However, the legislative session lasts until April, and backers could try to tack it onto another bill this year or push it again next session.
“It may be kind of a long haul,” Young acknowledged of the bill’s prospects. But “just bringing it to light may bring it to the attention of our corporate partner in a way that may accelerate some discussions.”
“We have to explore every opportunity for the benefit of our taxpayers.”
Staff writer Michelle Baruchman contributed reporting.
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