Decatur School Board Delays Annexation Decision

Patch reports this morning that the Decatur School Board has delayed a decision on annexation for at least 30 days, pending more information.  According to Patch, Board Chair Marc  Wisniewski asked the study committee to come up with projections of how land values might change in the annexed areas.

“Using only current values is not significantly insightful,” he said.

A study committee delivered a 24-page report that said annexation would force the school system to quickly build or expand buildings, raise taxes and cut programs.

Wisniewski said two of six areas considered for annexation–the ones including the Publix shopping center and Suburban Plaza–had the biggest financial upside for the schools.

This is an interesting point.  If we’re going to adjust enrollment projections in annexed areas into the future based on current student residency inside the city, we should also attempt to adjust commercial values to bring them in line with values inside the current city limits.  At least, that’s what it sounds like Mr.  Wisniewski is getting at.

The delay in a School Board decision now puts all official board decisions (school and city) on annexation into the month of December.

57 thoughts on “Decatur School Board Delays Annexation Decision”

  1. I agree with him that this should be looked at. This may show significantly increased property tax revenue, which may (or may not) pay for the increased cost of educating additional students. And it may have the unintended (?) effect of driving lower income families out of Decatur. But I do agree if the City annexes certain areas, the tax burden (tax rate and assessments) should be equalized between the new and current areas. Maybe we should all pay less in property tax?

  2. He is right and wrong. In the short term, the current values will be used in collecting taxes in prior to any re-assessment or any eventual increase in property value due to the fact that the property is located within CoD (and this premise is tenuous at best), so any future increase in value may be moot if the short term impact is as great as the existing report suggests.. Tthe value of revenue generating commercial properties is determined by the amount of rental income the property generates. Maybe I am missing something, but it will be years before any meaningful rent adjustment occurs as the current tenants have binding, contractual obligations known as leases. Further, in that timeframe, market conditions will have a much larger effect on rental rates. It is a stretch to assume that commercial property values will materially increase just b/c the city line was re-drawn, especially when factoring in the increased liabilities (i.e. taxes) arising from the annexation. These buildings aren’t being picked up and moved downtown, and I can’t imagine PetCo, for ex., paying 25% more for rent b/c they were annexed. Redrawing the city line isn’t going to increase traffic at that intersection or change the surrounding demographics.

    But, if you accept the argument that the values of these commercial properties will increase in the long term resulting SOLELY from the annexation, he has a good point and these figures should be reviewed. Then, we will have a more complete picture and can better weigh pros and cons in both the short and long terms. IMHO, adding projections of future values to the mix (which will undoubtedly be influenced by the bias (unintentionally) of those performing the calculations) only muddies the waters.

    1. ” IMHO, adding projections of future values to the mix (which will undoubtedly be influenced by the bias (unintentionally) of those performing the calculations) only muddies the waters.”

      First, I don’t accept your premise that whoever examines how values might change will bring bias to the projections.
      Second, are you arguing that they should not look at how those commercial property values might change, because doing so makes it all too complicated?

      1. Where did I say that anyone would intentionally change any numbers? But, if you start with the premise of “by how much are commercial values going to increase?”, your calculations are likely to show an increase, and vice versa. Human nature, not evildoing.

        And no, I am not suggesting we not look at any aspect of this due to its complexity. I am saying that the annexation of these commerical properties will NOT result in any actual, net increase in value.

        1. You said, “adding projections of future values to the mix (which will undoubtedly be influenced by the bias (unintentionally) of those performing the calculations) …” and that is what I quoted and what I responded to. Please read more carefully.

      2. I am reading Nate Silver’s “Signal and the Noise” right now, and DawgFan’s assertion of unintentional bias in projections is actually not all that controversial a concept in the field of statistics. The trick is that you need to ASSUME and ADMIT bias when you look at/create projections. Too often we see a projection number and assume it as fact, because its tangible and “based on math”. However, most projections should be couched in a range, and all of the limitations/biases of the projection should be admitted up front.

        Thus far, the CSD workgroup has been very humble and has admitted much of the limitations of their forecasts, which indicates to me that they’ve got some good stats folks on their committee.

        1. Nate Silver was on Bill Maher’s show last week, and I now think, despite not having any kind of head for math, that I’m gonna have to read his book. He’s a genius, but speaks plainly enough so that those of us who aren’t in his league can actually understand what he’s talking about. You’ll have to update us on how you liked that book!

        2. Agreed. We’re human, after all. We all have our biases, and those who would deny that are likely the most biased of all. Of course bias is going to seep into something as unscientific as attempting to predict the future, which is why the vast majority of projections are wrong.

  3. Let’s stipulate that residential becomes more valuable if annexed into a desireable school system. But does that extend to commercial? Obviously no one leases commercial space in the Publix shopping center so their children can go to Decatur schools. They lease that space to make money. If Decatur proposes to raise the tax rate and the assessed value of that commercial space, how does it become more valuable? It seems to me that the primary effect is to lower the projected after-tax income of the property and, hence, its value.

    1. Seems to me we should examine every possible variable before making a decision. Glad Mr. W. is paying close attention.

    2. As others have said, land value does not change significantly for commercial tracts simply by virtue of moving from DeKalb to Decatur. The upswing in value, and what I’d imagine Mr. Wisniewski is getting at, is that these single-use commercial areas would likely be rezoned in accordance with Decatur goals, presumably with our MU zoning category, which would present a significant up zoning and allow for a more urban and dense level of redevelopment by right than what is currently allowable.

      Land valuation follows zoning. Redevelopment at those sites could, in time, still include current large format retail, but also office and residential.

      Such redevelopment would still be market-dependent, of course, but land development by nature is always speculative. It’s the potential that matters, which is why the owners of the DeVry parcel asked to be annexed. Because Decatur’s zoning allows for more flexibility and market-responsiveness, which makes the land — at least in theory — more marketable.

      1. Valid point, but we should not base this decision of a bunch of “what-ifs” and speculation about what might be built a decade from now if the properties are annexed. Even assuming any specific property has greater potential, it doesn’t necessarily follow that market demand will exist for redevelopment of that property or that such a MU development will result in a net benefit for the city.

        1. If we should not consider “what-ifs” as they relate to redevelopment potential and long-term property valuation, we should also not consider “what-ifs” as they relate to enrollment, and I don’t think anyone would be down with that.

          The CSD committee, rightfully so, is trying to wrap their heads around what the immediate enrollment impacts would be, as well as what they’d be over time. This involves a significant level of educated guesswork. It’s only prudent for the city to do the same with the economics, as the long-term benefits vs. liabilities of the big picture is exactly what’s driving the whole prospect of annexation to begin with. To only look at one side and not the other renders the thoughtful work of a lot of people, most of it volunteer, a pointless exercise.

          You can’t weigh pros and cons with just one side of the scale.

          1. I am not disagreeing with your argument in theory, and fully agree that we need to make an informed decision. I guess I am trying to say that I would assign much more weight to a known (immediate impact on CSD) than a purely speculative unknown (what might happen a decade from now, assuming sufficient market demand and availability of financing, if we rezone). So, I see these additional projections as an exercise in futility.

            Let me add that if the school committee’s report had been more of a “maybe” than a “h*ll no”, I would be more interested in these projections as they would have greater potential to impact my view. But, given what we know now, I honestly don’t understand why this is still on the table. The schools can’t absorb the students, and there isn’t enough money or land to build new schools. End of discussion.

            One more point. Although this is undoubtedly self-interested and perhaps short-sighted, in 10 or 15 years, my kids will be long gone from CSD. So, as a parent of current CSD students, why would I worry about what might happen a decade or more from now (and yes, I am assuming that is a realistic timeframe for any material re-development of the proposed areas given current market conditions) when it is clear that the CSD will negatively be impacted as early as 2013 if CoD annexs the properties?

          2. That’s a fair enough point, and I think the request for more information on long-range property values–even if it’s iffy information–makes sense. At the same time, since the long-range tax impact is quite iffy, I think we should put more weight on the short-term consequences, where CSD has made a strong case that annexation would cause major problems for our school system. If we had some extra capacity in our schools, then squeezing in some more students (even if a bit inconvenient) for the sake of a possible but far from certain long-term improvement in the city’s tax digest might be worth doing. But under the current circumstances it seems really imprudent. [edited to add: I see DawgFan scooped me as I was composing! Oh well, I’ll let this stand anyway.]

      2. The rezoning of the Devry property did not affect it valuation. There seems to be broader problem with commercial property valuation within the city that this issue might give us a chance to address.

        1. To clarify, I was not speaking specifically of assessed valuation. I was speaking of market valuation — what the property owner can theoretically sell the property for based on the returns potential for the buyer. At some point after that property is sold — presumably reflecting these reality-based criteria — the assessment would be adjusted, just as a house assessment is adjusted post-sale. And once they redeveloped it, it would be reassessed again, either collectively or at the sub-parcel level, depending on what the buyer did with it.

          1. I see, and that is an important distinction, since tax valuation is what’s relevant here. And to clarify on my end, the problem I alluded to is that tax valuation of commercial property in Decatur seems not to have kept up with market valuation, so neither the City nor CSD has reaped the tax benefits of the growth in commercial market valuation. This seems to be the main reason that the tax burden has shifted so much to the residential side.

      3. Assessed land value follows more than zoning. The County Property Appraisal Department and the County Board of Asseosors will still determine the value of the property regardless of annexation. They will still use the same criteria for establishing fair market value, which is overwhelmingly based upon past comparable sales, not speculative value based on land use plans, or zoning.

        The land use plan for DeKalb County classifies one property in a Town Center and the other in a Commerical Redevelopment Corridor. The permitted land uses include retail, multi-family, office and commerical. The difference in what DeKalb permits and what Decatur might permit are insignificant with respect to future uses of these two sites.

        Suburban Plaza was built in 1961. A little over 50 years later it is being redeveloped. Emory Commons and Publix were built in the late 1980’s. Suburban Plaza’ redevelopment is happening now. It is unlikly to be redeveloped for another 50 years. When Emory Commons is redeveloped is anybody’s guess.

        1. My point is that, should commercial property be annexed into Decatur, it opens up new avenues of redevelopment that will lead to reassessment over time. That reassessed value needs to be projected and considered.

          I don’t have the actual maps in front of me but, as I understand it, the zoning designation for those two commercial areas does not currently match the land use designation you’re citing. The zoning is still flat out commercial and would require a redesignation to develop along the lines of a Town Center model. That involves the unpredictability of a public process, which is not attractive to buyers.

          My point remains. In terms of long-term redevelopment, the sites in question are likely more valuable in Decatur than in DeKalb. Yes, this value would not be reflected in its assessed value until sold and/or redeveloped, but it’s there nonetheless and would eventually be realized. We need to establish some best-effort projections as to what it would be.

          1. Anyone that has dealt with the Seligs knows they don’t sell. This is true of most successful commerical property owners when dealing with performing assets. If they sell their assets, they lose their only source of income. They redevelop. No buyer is going to be involved in these properties, but even if they were for sale, contracts are routinely drawn with zoning contingencies.

            Second, a request to rezone to a permitted use in the comp plan is difficult to deny. Local governments that don’t follow their land use plans are in a poor legal position. Zoning cases that go to courts get decided by a judge who doesn’t pay much attention to conditions and site nuances. Rezoning is Dekalb is considerably easier than in Decatur.

            To believe the sites are more valuable within the City is pure speculation. 1. one site is under redevelopment, 2. the same people/methodology assess their tax value, 3. the assesment is based on past sales of comparable properties, 4. there is no plan to redevelop the other site 5. the differences in future potenial uses of the property are insiginifcant and 6. even if everything previously said is incorrect the marginal difference in value in not siginifcant to the school system.

            In fact, an argument can be advanced that a condo or an apartment at these sites would be worth more in unincorporated DeKalb. This argument is based upon the likelihood that residents are unlikly to have children, and would not find a value in the school system for which they would be supporting. Therefore your typical multi-fmaily resident would have to pay for the higher taxes in Decatur and not obtain a value. When buyers are considering a purchase, they must evaluate the taxes and operating costs. It would be eaiser to obtain a higher sales price with lower taxes.

            1. So is the suggestion that the city shouldn’t assess the economics with the same level of rigor as the enrollment? We can debate our respective speculations all day but the commission still needs some actual data (which can then be debated and vetted in the same way enrollment figures are) if they’re going to make an informed decision. I’m ambivalent as to how the numbers shake out, I just want comparable effort invested in exploring them. That’s ultimately what I’m advocating for here.

  4. I don’t get it. Don’t we know NOW that there would be no possible way to absorb so many students into a system that is already struggling to keep up? Don’t we know now that our good school system is one of the draws of our city and that by dropping a bomb into that system we undermine all that value in the first place.

    It would be one thing if we had under used capacity.

    I appreciate that sometimes a bigger system might make things easier…but I think about start times, bus schedules, reconfigurations.

    I do no see a school system that is ready to rapidly expand on multiple fronts….

    REGARDLESS of what the property tax projections are.

    1. Annexation funds school system expansion. While I am sure there are more, I can only think of 2 other ways to fund expansion — more tax and more tuition paying students. If there is no room for more tuition students and us residents don’t want to take on an additional tax burden, how else do we fund school operations to continue to make our school system the best around?

      On a quasi related note, if I was Selig I’d be all over supporting annexation if 1. I had a pretty good idea of how well the CoD would support my rezoning plan for MU and 2. had a decent sense of what could happen with rapid transit around here…

      1. But if the annexed areas are a liability (Midway Woods with its zero commercial) then how does that help?

      2. School expansion is typically paid for by SPLOST not by property tax dollars. The problem with annexation is that while it might bring in X amount of extra net dollars to annex property… it will cost Y to educated the students that arrive as a result of that annexed property. When Y is greater than X… CSD loses money. Annexing a bunch of residential property is revenue negative both for the City and the school system. It’s not rocket science… I really don’t understand the debate here.

        As far as re-valuing residential property, the homeowners in the annexed areas are going to fight reassessment like there was no tomorrow. In addition, DeKalb County, not City of Decatur, assesses property and the County office is stretched thin. They are not going to prioritize reassessment of a bunch of property where COD is getting most of the revenue from it. With new residents pushing to keep their tax bills down (through a huge number of repeated appeals) and DeKalb not being in too much of a hurry to win that reassessment battle, it could be a decade before the newly annexed properties are assessed at their true value. By that time, CSD has been run into the ground and is no longer a good school system (or has been forced to merge into the county) so all those annexed houses aren’t worth much anyway.

        I find it ironic that all these parents are fighting to get into a school system that they will not have to pay for (because they will fight their reassessments). Then as a result of their arrival… that school system that they covet so much will falter.. or collapse into DeKalb County… and they will be back in a struggling school system again.

  5. On a related note, I sent an email to Peggy Merriss and the commissioners who represent my district. I was pleased to receive two responses, both of which said they are still in the information-gathering stage.

    The impression I get is that city leadership is taking this discussion very seriously, and are listening to all involved parties.

    Please take a moment to send an email with your views on annexation, as this will help give the commissioners a feel for what citizens (both inside and outside the city borders) want.

    Eric

    1. I sent an email to Fred Boykin and have heard NOTHING back. Very disappointing, I must say. He didn’t even send a “thanks for your email” email.

      1. New Scott, thanks for the notice on my lack of a response to your email. Some of the annexation emails I opened on my work computer failed to show up on my home computer and I overlooked them when I got to the house and did my email replies. There was the one from you and 3-4 others. I sent emails to you and the rest this morning. My apologies for the delay.

        Fred Boykin

  6. DM: I take Marc’s comments the same way, and it’s a fair question. The annexation committee took an unofficial stab at this, but thought that sort of projection property belonged to the City. So the committee presented findings based on the information it has so far received. I myself don’t know enough about these markets to speculate about how much single family housing may grow in value vs. commercial vs. apartments and condos. (There are a number of apartments and condos around Publix in Area A). But I assume that sort of fine tuned analysis could be reasonably done.

    sfmaster also raises a good point about the timing. I gather from Dr Edwards’s comments last night that a crop of new students from annexed areas could not simply be rolled in, but would have to be built for, which raises questions of how much, where, is a new school needed, where would it go, etc. The time for annexing would be when the line is going down; and ours is going steeply up.

    Which reminds me: The report last night also did not include those capital expenses into its financial test. So both the revenue growth and the capital expense lines need to be added for a more complete picture. (SPOLST funds have already been allocated.)

  7. +1 sfmaster.

    Our schools are on a great trajectory right now. There’s no compelling need for annexation at this point, and it seems clear that although there are possible upsides, the downsides are far more apparent. I have expressed to my commissioners that I oppose annexation. They’re clearly taking opinion information in and tallying it. If you’ve already formed your opinion on this, write your commissioners.

    1. “Our schools are on a great trajectory right now.”

      I wonder if the report I looked at on Patch is the same one everyone else is seeing? It seems blatant, that space is a huge problem in the near future even without annexation.

      Even without, it shows the student body is going to increase by about 2500 within 5/6 years, not decades. Obviously there would be an initial pinch (but a building that could assist), but they are projecting thousands with no plans for another building, if I’m reading that right. What if suddenly they have got 3,000 kids on their hands, and absolutely no where to put them?

      It sounds like they know for sure they’ll need 1 or 2 more schools, and annexation is the only way they can realistically come up with the money to get them built/staffed by the time need them ready.
      5 or even 8 years isn’t really that far away.

      1. “It sounds like they know for sure they’ll need 1 or 2 more schools, and annexation is the only way they can realistically come up with the money to get them built/staffed by the time need them ready.”

        Not to be blunt or rude, but you clearly didn’t read the report closely enough. Although annexation will result in an increase in gross revenue, it will be a net loss for CSD. Put another way, the increase in tax revenue will not cover the costs of the new students. So, if annexation is a net financial loss, it is most certainly not a way to “come up with the money”. In fact, the opposite is true.

        1. It didn’t seem to really call for that, but whatever. I read it like I’m sure most of us have, and like most everyone else I’m curious about the motivations and what it means for the future, and making my own speculations based on various things I’ve heard here and there. I understand things are tight, but I also don’t believe waiting until a situation hits crisis point to move on it, because it may or may not directly affect me, is the right thing to do either.

  8. My biggest concern stems with the reason we started this discussion.
    Our Decatur 2010 Strategic plan Goal #9: Expand and Diversify the City’s Revenue Base. Task 9B states: Explore annexation options in partnership with the City Schools of Decatur that expand the property tax base and enhance school operations.

    It is obvious from reviewing the CSD document that many areas considered for annexation are a liability and do not diversify the tax base. Look for yourself https://docs.google.com/file/d/0B_iTGsl4p4A8Y0NtUGJvZndyUDQ/edit

    If the city is supposed to be working in partnership with the school system then the commissions should take the time to listen to their input.

    1. Rob, thanks for the link to the report. I have to say that I’m very impressed with the level of effort, analysis and diligence that clearly went into creating it.

      I’d like to thank the committee that worked on it and ask that anyone who would like a better understanding of the issues read it in full. No, I didn’t work on the committee, but can only imagine the hours that went into creating it.

  9. I applaud the input from Marc W. to not rush to a decision and to get all the information possible. From the current data the annexation work group put together, the $ are positive for Area A, not too bad for Area B and okay for Area B1. These are the 3 major commercial areas. And, these numbers do not include any increase in property values of either the commercial or the residential. I think these are the areas that really need to be considered. The student burden would fall on Clairemont and Glennwood for K-3. Westchester can certainly be expanded with trailers in the short-term and construction in the longer term (please go up and not out). As the real crunch in space seems to happen at the 4/5 due to the system currently implemented by CSD, Westchester could be re-opened as another 4/5 or as a K-5 choice school to relieve the burden. The other areas do not provide any real chance at positive revenue for the City or CSD.

    I also don’t believe the city is rushing to a decision or ignoring CSD. The City obviously believes it needs more commercial to be a viable entity in the future. Looking at all the annexation options in order to have more commercial in the city is only prudent. I heard Peggy and Fred were present at the CSD Board session to hear all the discussion. Philosophical question: If the City can’t survive as a separate entity without a viable tax base in the coming decades, does that mean CSD can’t survive? Does no CoD = no CSD?

    On a side note, the Board also received a presentation on re-applying to the state to keep CSD a Charter System. CSD is recommending to the Board to go ahead with this even though many of the hoped for advantages for freedom from state rules about CRCT and other idiotic requirements did not materialize for charter systems. Also, the revised charter application appears to gut requirements for parent involvement in the SLTs which are integral for a charter system. Of course, all this is lost in the current conflagration about annexation.

    1. “If the City can’t survive as a separate entity without a viable tax base in the coming decades, does that mean CSD can’t survive?” I’m curious if you think that’s what’s going on here. Are you suggesting the City might be facing a major financial crisis on the horizon? I have noticed that CSD spending per student has been declining while City spending per resident has been increasing, but not to a level of existential proportions. Certainly the City has been taking on major bonds as if it plans to be around for a while. Just curious why you ask that question.

      I’m also curious, by the way, about your moniker.

      1. No, I’m not saying there is financial calamity around the corner for COD. However, CoD does have plans they want to implement and no $ to do so fully or quickly (Transportation Plan for instance). Also, I suspect they want to increase the commercial ratio to maintain the good balance they have now. While overpriced little boutique stores/restaurants often work in downtown Decatur they also come and go. Stable, larger commercial developments may be better over a decade (and maybe worse, too). Since it’s hard to get them into Decatur (just remember the Family Dollar controversy in Oakhurst), annexing them in to begin with might be better.

        My moniker – I tend to like mixing terms others find to be contradictory. Call it a quirk.

        1. EcoNuke:

          “have plans they want to implement and no $ to do so fully or quickly ”

          Obviously these plans must relate to projects inside the current city limits. (The city has no authority to develop plans for property outside the city limits.)

          1) If the city is financial sound; and
          2) Adequate commercial tax growth is available from existing CoD commercial property.

          Why would we want to move forward with annexation?

          ——–
          #`1

          At the last Commission Meeting, Ms. Merriss clearly stated that the City’s financial condition was sound. Additionally the Commissions recently completed an analysis of future pension obligations indicates no unfunded obligations.

          http://decaturga.swagit.com/play/10222012-529
          (Q&A Session, 25:45)

          #2

          The current CoD commercial tax digest is undervalued by approximately 50%. Correcting the existing errors in the CoD commercial digest over the next few years would produce more revenue than the proposed annexation AND require ZERO increase CoD (and CSD) expenses.

          ————-

    2. I’m also concerned about changes to charter. It results in SLT-lites, making it clear that the CSD system charter is much more about flexibility from the state than about local school governance. I think this jeopardizes the existence of system charters. Eventually the State is going to notice that system charters have nothing to do with ,charter schools, other than the word “charter” in the title.

    3. At the annexation meeting two weeks ago the Commission noted that we are in an extremely strong financial position. It does not benefit the CoD or its residents to add revenue that does not even offset the cost.

  10. I would like to respond to some of the earlier comments regarding valuation of the commercial properties and the implications of the annexation. According to the property tax calculator that Peggy Merriss provided, my post annexation taxes based on current assessments, would rise 26%. I am already upset that as a non-resident I will not be able to vote on this issue and now I read that some people think it would be a good idea to assign downtown Decatur values to commercial properties on the periphery.
    Please realize that it is the small businesses that ultimately pay the property taxes and I can assure you that none of us are calling Brinks to take our deposits to the bank.

  11. I am again concerned by the fact that even though the simple truth has been found here that certain individuals seem hell bent on finding a justification to move forward with annexation. Statistics and projections can be manipulated and from the requests of Mr. W seem likely. Increase projected revenue, decrease potential enrollment projections and SHAZAM, they have the outcome they want.

    I would like to know if any of the Board of Commissioners and/or members of the Board of Education have any financial interests in the annexation areas. This should include personal, business, partnerships and family/friends. This smacks heavily of bias.

    1. MBAero, maybe we should put away our tinfoil hats.

      Mr. Wisniewski, as one example, doesn’t have some secret piece of Selig enterprises nor do I find it too likely he went and bought up a bunch of plots of land and is back there rubbing his hands together like Mr Smithers…

      1. I don’t subscribe to any conspiracy theories here. I’m convinced that Marc W. is doing his due diligence, and I can assure MBAero that CSD will work with solid numbers.

        That being said, we need to set aside the pretense that this annexation proposal is simply part of a fact finding mission. Large scale annexation has been pushed and lobbied for over the last several years, and anyone close to this issue knows this to be true. In 2008 the push was based squarely on taxes, but with a grossly inadequate analysis of the tax implications on the larger CSD side. Those implications have now largely been clarified, with negative tax implications, and yet the push continues without a clear rationale. This sort of thing invites conspiracy theories and that is extremely unfortunate for everyone involved. Let’s put down our tinfoil hats AND our kool aid and get real.

  12. It might be noted, in a related item, that Chamblee area residents proposed for annexation, chose not to be annexed 51% to 49%, a margin of 34 votes.

Comments are closed.