Tax Allocation Districts (Atlanta, Marietta, Perry: real estate, lawyer, houses)

[samiwas1]

I've been wondering what peoples' thoughts were on tax allocation districts.

Originally Posted by Wikipedia

A tax-allocation district (TAD), also known as tax increment financing, is a defined area where real estate property tax monies gathered above a certain threshold for a certain period of time (typically 25 years) to be used a specified improvement. The funds raised from a TAD are placed in a tax-free bond (finance) where the money can continue to grow. These improvements are typically for revitalization and especially to complete redevelopment efforts.

The reason I'm wondering is that our neighborhood is being directly affected by a lawsuit over one. There is a blighted derelict shopping center with one store remaining open just down the street. For years, there have been plans to redevelop it into a brand new shopping center, with both retail and residential. But the development is partially funded by a tax allocation district.

As such, one lawyer in town has been suing over and over to stop the development, much to the chagrin of local residents. While I see his point that he doesn't like tax money being used to help fund private development, he doesn't even live or work in this area. The residents who do live here have been out in force wanting this development to happen, so that we have a place to shop and spend. I currently do all that shopping in Cobb County instead of Fulton, where I live.

What are your thoughts on such a thing.

[cwkimbro]

I would love to know more about the situation and which tax allocation district this is.

It is hard for me to comment on that matter in context.

a TAD isn't designed to use public money for private development, but it often use an acknowledgement that public and private development have to go hand and hand together.

A great example of one of the first TADs in the area was Atlantic Station!

The development is private. The TAD didn't pay for the buildings, however it did pay for enviromental clean up of a derilect industrial area, a new bridge, sidewalks, and 17th street, utility infrastructure, etc...

It paid for things gov't typically would build and pay for.

The issue is the private development can't occur without the public infrastructure investment (and this is true for all types... our houses are built on roads).

Sometimes the gov't needs to tailor public infrastructure for the type of private development you might get in allocation.

We aren't going to build a bridge over 85/75 to a house, but it might be worth doing to a new urban district: Atlantic Stations.

I don't know if any of this helps?

I can't comment on the situation your mentioning without knowing details.

[red92s]

I think in areas where lacking infrastructure or environmental blight are preventing development, they are a good bridge to revitalizing an area.

[samiwas1]

Originally Posted by cwkimbro

I can't comment on the situation your mentioning without knowing details.

I was mostly asking as a whole, but the development in question for me is the Moore's Mill Shopping Center on Marietta Blvd. in the Bolton neighborhood.

This is it on google maps. I can't seem to find any photos of it online, curiously. But in the maps link, you'll see the main shopping center, which is abandoned except for one store, a run-down Family Dollar. To the east are two old food joint, both of which are abandoned and boarded up (one has some homeless people living in it). Further to the east is a row of houses along Coronet Way. These have all been vacant since I moved here in 2005, and are practically falling apart (someone does seem to mow the grass, oddly). All of this would be razed and the new shopping center would be built.

North of the lot are one half-torn-down building and one building that was destroyed by fire and left there (it was not destroyed yet when the satellite shot was taken). I assume that these lots would become more prime territory with a new shopping center across the street and get taken care of.

New Moore's Mill Shopping Center (pdf) was the original plan for the new development, containing a supermarket, restaurants, and other shopping. The newer plan I think cuts the residential in phase 1 and makes a large park with much of the land. in the future, phase two would add the residential.

Residents here are clamoring for this because our closest supermarket is several miles away, and food options are limited in the area. It also fixes some traffic issues by adding some new road connections, and adds medians and trees and such.

I don't know why the development can't be done entirely privately, but as it stands, it will not happen without TAD funding.

[cwkimbro]

Originally Posted by samiwas1

I don't know why the development can't be done entirely privately, but as it stands, it will not happen without TAD funding.

Well in most areas the answer to this is simply... it hasn't happened and private developers haven't touched it.

The still does answer the question of -should-.

I know nothing about where the money is coming and going, but it appears there have been 5 redevelopment proposals in the Perry Bolton TAD (which is much larger than this one little area). This appears to be the largest and over $100 million in total private market value. They originally requested 18.5% funding from the TAD. I don't see any details beyond that or justification for the spending or where it goes.


The premise of how a TAD functions is probably best explained from a government point-of-view. It is designed to make the tax digest of an area better, which makes the city (or county) better off in the long run. It is also important to look at what the tax dollars are, exactly where this particular tax revenue comes from.

The little information I have on this project is actually a decent example.

The property is valued at $14 million... and would be tax accessed at $14 million. The redevelopment proposal would increase the value of the property to over $100 million, which would greatly increase the amount in taxes the government receives from that development.

To keep it simple lets just say the property now generates $1000/year in property taxes (reality would be much higher), but with redevelopment it would generation $10,000/year

What the city does is agrees to keep taking $1,000/year in property taxes for the city budget (as it always have). It then takes the extra $9,000/year in property taxes and puts into the TAD for a limited period of time only (20-30 years). The TAD is then suppose to spend the money making improvements that will make the development happen. To clean up old projects, beautification, grading, etc... Much of this is often worked with a developer proposal, so the developer can get streets built on site, etc...

The general premise... the development can't happen without that spending, but the TAD can't exist w/o the private development. They will spend money hand and hand together, as opposed to spending money and hoping for the best.

The other reality to this is.... The TAD issues a (20-30 year) government bond to get the money up front, then they use that $9,000/year to pay the bond off. As everyone knows, whenever you borrow money there is some risk a TAD might fall short or get more money down the road. Correct math and proper projections are important and this scares some people from the concept.

This is one thing that has slowed down TADs, including the Beltline, the housing bubble collapse stopped private development that would otherwise generate money for the TAD.

Now I have to complicate this in one way. By law part of property taxes has to go to education, the Georgia Supreme Court upheld this a few years ago. So the reality of this scenario.... the existing $1000 still goes to the city, an additional $3000 goes to the city for education only, and the TAD gets $6000...not $9000.

This has been a boon for Atlanta Public Schools in funding and a small part why they can build such nice school buildings.

Now as a concept... I support this. It makes redevelopment happen for the better, increases desirability of areas, and adds to a city's long-term tax digest and financial health. It is tax dollars, but it isn't taking any tax dollars that exist if the development didn't happen either (which is why struggling governments jump at this). It is a powerful redevelopment tool. I hope it sticks around, even if it needs to be legally altered.

However, it is unique. The situations in which it is used should be open to debate and it is important when issuing bonds to make conservative financial projections.

Other points of concern for TADs. I'm a little wary of them in new growing areas, exurban areas, etc... vs. redevelopment areas.

Often those extra tax dollars are needed as an impact fee region wide. The redevelopment assumption is that the city doesn't have to create a whole new water and sewer system or road network throughout that part of the region for development to happen. Instead its redevelopment... it needs to enhance and improve what is there locally.

Hope this somewhat helps.

[samiwas1]

Thanks for all your insights. Enjoyed reading it. I've always thought the TADs could be a good thing, but I now a lot of people are heavily against using tax money towards small private development, even if that investment will yield far greater returns.

Seems a little different to me than adding a new stadium. In this case, it's removing a blighted, vacant shopping center, which is doing absolutely no good for anyone, and replacing it with stores and restaurants which will be used heavily by the surrounding neighborhoods.

Seems like a win-win for everyone. Unfortunately, that one lawyer doesn't agree and has been stalling the development for years. Unfortunately, my property value suffers in his quest. I was looking to see how many people thought they were a good use of tax money vs. bad.