Atlanta Journal-Constitution
February 18, 2008
Maria Suporta
It's a major hit. The Georgia Supreme Court ruling limiting the amount of funds that can be generated in a tax allocation district is threatening redevelopment plans across the state.
Even worse, metro Atlanta already has been lagging in its use of the TAD financing tool. Unless something is done to quickly change Georgia's Constitution, the state, its cities and towns will lose even more ground compared to other metro areas across the country.
Forty-nine states in the country have laws permitting TADs, which are also known as TIFs (tax increment financing). And many other communities are far more adept in using this financing tool to enhance their cities.
That point hit home when a delegation of about 110 metro Atlanta leaders (LINK) visited Chicago in 2002. At that time, Atlanta was just getting its feet wet with a couple of TADs, including one at Atlantic Station and another around Centennial Olympic Park.
About 20 people from the LINK delegation called on Chicago Mayor Richard Daley at City Hall, where he encouraged them to seize on this financing tool to reinvest in their communities. At that time, there were 220 TIFs in Chicago (today there are more than 240), and several of them were about to expire as bonds were repaid. When that happened, Daley said local governments would receive a major windfall in tax revenue.
The message resonated with Carl Patton, president of Georgia State University, who is an urban planner who had first heard of TIFs when he was in school. So he used the opportunity of the Chicago LINK trip to spread the word of how this could help revitalize communities throughout metro Atlanta.
The idea took hold. Atlanta currently has 10 of the 27 TADs across the state, according to Atlanta Mayor Shirley Franklin, who was in her first year in office when she met with Daley on that LINK trip.
She saw TADs as the centerpiece for financing the ambitious Atlanta Beltline project, a 22-mile redevelopment corridor encircling the central city. In all, the TAD had been expected to generate about $1.7 billion of the $3 billion project.
But the Georgia Supreme Court ruling declared that the Beltline TAD couldn't include property taxes dedicated to schools, roughly half of the total. That ruling has put a halt on all TADs that already have been approved by voters, but where bonds have not been issued.
"It's like we are handicapped while playing the game," says Patton, who also served as co-chair of the Beltline TAD Steering Committee. "We were late coming to the game. And we were just figuring out how to use these TADs."
Patton referred to a city planning textbook published more than 20 years ago that said tax increment financing has become the single most important source for development with the reduction of federal involvement in the revitalization of cities.
Steve Labovitz, an attorney with McKenna, Long & Aldridge who works on TADs, explained why they are such attractive redevelopment tools for city.
Take Atlantic Station. In 1999, when the TAD was approved, the amount of property taxes being collected in the area was $325,000. The city, county and the school board still receive that base of taxes. But during the life of the TAD, the property tax increases go toward repaying bonds that have been issued to invest in community improvements.
For Atlantic Station, $250 million in bonds have been issued. Labovitz anticipates that those bonds will be paid off within 10 years. At that point, the local governments will enjoy a windfall of revenue — about $40 million a year.
But most importantly, TADs turn blighted communities into vibrant ones. That translates into countless benefits. Lower crime rates. Safer neighborhoods. Public investment in sidewalks, streets and transportation. And healthier communities also translate into healthier schools.
Labovitz uses another example. "Look at the resurgence in downtown," he says. "Not one building since the early 1990s has been built without some support from TADs."
But this is not just an Atlanta story. Communities throughout the state are discovering how TADs can help infuse public funding in areas that want to attract private development. They understand that TAD is a mechanism where everyone wins — developers, city governments, county governments, school districts and, most importantly, residents who want to live and work in thriving communities.
Those communities are geographically diverse — from Macon to Augusta, Forest Park, Savannah, Smyrna and Albany — demonstrating that TADs have far-reaching benefits for revitalizing the entire state.
"Long-term, we have got to figure out a way to change the Georgia Constitution," says A.J. Robinson, president of Central Atlanta Progress, a downtown business organization that has witnessed first-hand the effectiveness of TADs. "All these other states have this financing tool. We will be at a competitive disadvantage if we don't have it."
Fortunately, a groundswell of support for TADs is underway at the General Assembly.
Later this week, two state senators — Kasim Reed (D-Atlanta) and Dan Weber (R-Dunwoody) — are expected to file legislation calling for a referendum on the November ballot that specifically would allow communities to include school property taxes in future TADs.
According to Labovitz, he believes there is strong bi-partisan support in both houses of the Legislature to give voters an opportunity to include that provision in the state constitution. Two-thirds of the Legislature would have to support putting the question before voters.
If Georgia legislators want the state's cities and towns to prosper, they must agree to put the question before voters. And it's critical that voters fully understand the power of TADs and how they can help transform their communities.
Let's hope legislators and voters will endorse this initiative. If they don't, we will be at a competitive disadvantage. And, our communities won't benefit from one of the greatest stimulus packages our cities have received in decades.