Giving Decatur the Power to TAD
Decatur Metro | October 19, 2010On your November 2nd ballot, Decatur residents will find this lovely legalese…
Shall the Act be approved which authorizes the City of Decatur to exercise redevelopment powers under the ‘Redevelopment Powers Law,’ as it may be amended from time to time?”
In layman’s terms this essentially asks you, “Should Decatur have the option to create Tax Allocation Districts inside the city limits?”
Tax Allocation Districts or “TADs” have been used with mixed success throughout the Atlanta metropolitan area in recent years. The most prominent – and successful example – being Atlantic Station. In a nutshell, TADs use additional tax revenue generated by new development on-site, (i.e. – the difference between your taxes pre-renovation and after renovation) to pay-off the very construction bonds that funded the development in the first place.
As for the pros and cons of such an effort, Decatur resident and lawyer Kyle Williams did a good job of summarizing these in his pro-TAD commentary on Decatur News Online yesterday.
“Proponents contend TADs stimulate growth and revitalize communities. Opponents argue TADs rob schools of funding, subsidize for-profit development, displace long-time residents and shift development risks to the public.”
Mr. Williams also suggests that this may be a good option for the Beacon Hill property, which has a plan for redevelopment but no readily available funding.
The city and the mayor have tried to make it clear in recent meetings that this referendum only gives Decatur the OPTION to create TADs and doesn’t deal with any specific TADs. For an actual TAD to be approved post-legislation, the city commission would have to create legislation, which would also have to be approved by the school system and the county.
So how will you vote?
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Anything that creates distance between gov officials and developers wallets is a good thing so no would a good option.
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Hmmm. My gut instinct is to be wary of anything that has any potential to hurt public schools. Hence, I am wary of charter schools even though I also clearly see their potential, especially the stimulus they give the public school systems to get their acts together and compete well. So, if a TAD could hurt public schools (but I don’t exactly understand how), I am suspicious. I’m even more suspicious of developers than I am of charter schools, even though I also know that without developers, we wouldn’t have neat development projects that are good for a community.
On the other hand, Kyle Williams seems like a smart guy who cares about the greater good of Decatur.
So far…..I need a more specific reason to approve a TAD option than that we might need it someday. Couldn’t we create it then?
The only way you could argue that a TAD “hurts” public schools, is if you believe that a property is ready to be redeveloped without a TAD. Then theoretically, you can say, look if we had let Jack over there redevelop this property, the school system would be getting all this additional tax money that’s now being used to pay off the TAD! If a property isn’t ever going to be redeveloped without a TAD, then schools, the city and the county can really only benefit if the TAD works out. “works out” meaning that the redevelopment value of the land is high enough to cover the TAD bonds for their 25-30 year duration.
As for doing it another time, from what I heard, the city’s been trying to get this thing through the legislature since the mid-2000s and only just got it this year. I think the city manager said that the owners of East Decatur Station were hoping to get a TAD to redevelop that area back then, and that’s what originally spurred the effort. Don’t think that’s still on the table though.
Not sure I agree with your conclusion about what could hurt the schools. As an example, if the development in the TAD added high density housing which added 50 kids to the school system, without any additional property tax revenue, there would be a pretty significant financial impact. However, I believe that the school board has to opt into any specific TAD, which means they have the opportunity to evaluate the cost – benefits of any proposed development before agreeing to forgo the increase in property taxes.
For anyone interested in more information, here’s a 2004 GSU study. There have been some changes, but I suspect this is still a reasonable analysis.
http://aysps.gsu.edu/publications/TAD_compiled.pdf
I’d like to hear more about specific TADs that have succeeded and why, and ones that have failed and why. And what happens when one fails–if the increased tax revenue fails to materialize, is the bond eventually forgiven somehow, or is the city stuck paying it off anyway? If so, how?
This AJC article does a good job of detailing what can happen if a TAD goes bad. A couple quotes…
If tax values in the redevelopment district fall below the level they were when the redevelopment began, the city could be on the hook to pay redevelopment costs. That has not happened, but values are on the way down.
Investors in TAD bonds take the risk of a default, but cities’ bond ratings could suffer and they could pay higher interest rates if the bonds go under. Cities are seen as having a “moral” duty to guarantee the bonds, he said.
As for successful TADs, Atlanta Station is one of the most successful in the country, according to many sources. The tax value of that property has increased over 6,000% thanks to the redevelopment.
The most comprehensive study of TADs in the Metro Atlanta Region was done by the Livable Communities Coalition, a Chamber of Commerce supported smart growth advocacy group. You can check out their publications page here (http://www.livablecommunitiescoalition.org/services/studiesAndReports.cfm). They analyzed TADs created in the first 8 years of their existence in Georgia.
Both advocates and critics of TADs make legitimate points. They are not a silver-bullet solution. But our city staff has earned my trust, so I’d be inclined to vote for it.
I think you’re right, JC, and Kyle’s point was right on: Individual TAD proposals vary significantly and need to be considered on their own merits (or lack thereof). All this vote does is allow the City the option of considering one. They would still have to answer to the electorate should one come up.
Bottom line, restricting options is a tool of control. That might be appropriate for politicians proven to be loose cannons but our leadership has shown themselves worthy of a little leeway.
Uh…. no.
Some TAD’s are good ideas and some are not. I’ll vote to give the City to option should it decide it wants to pursue one.
There are plenty of checks and balances in place to make sure that everyone is on board with a specific TAD should one be proposed (i.e., the City Commission and School Board must both approve). The public will have plenty of input and opportunity to make its opinions known.
To vote no would be the equivalent of a vote of “no confidence” to our city staff and political leaders that they have the City’s best interests at heart. In my opinion, since we would have to go back to the Legislature to get approval before putting in back on the ballot for another referendum, it is best to keep this weapon in our arsenal in case we want to use it. As Mayor Floyd said, it would be best to have the ability to use it if we need to. Not that we will.
Theoretical question – would a TAD for the former Big H property in Oakhurst be a good idea? Would it spur the owner to redevelop or sell the property – something that otherwise will apparently never happen?
See, this is where I think a specific TAD on the table would motivate voters!
Can someone explain to us novices more explicitly why we have to vote for this right now if there isn’t a specific TAD option on the table? Kyle William’s explanation of the process in Decatur Metro Online was very helpful:
“There are multiple steps to create a TAD: (1) legislation from Georgia’s General Assembly authorizing the municipality to hold a local referendum (the General Assembly approved Decatur’s referendum this year); (2) voter approval of the local referendum; (3) local municipal legislation creating a specific TAD; and, (4) school and county approval.”
My remaining questions are:
– Why was it so hard to get that legislation to allow Decatur to hold a local referendum? Would it be hard to get it again in the future?
– Now that we are in Step 2, does the referendum have to be held right now? Why can’t it be done in the future when there’s a specific TAD option on the table?
– What does Step 3, “local municipal legislation creating a specific TAD”, mean? An Act brought to the City Commission to vote on? The School Board? Or something that the Decatur voters can approve or not?
– If the TAD option is approved in this voter referendum, do Decatur voters get another chance to vote on a specific TAD at the time it is proposed or can they only influence things at that point by conveying their preferences to the City Commission and School Board which do vote?
Just trying to lay out the questions so that voters have as much information as possible rather than just voting by which official or DM poster they trust the most! Both knowledge AND trust are important.
- Now that we are in Step 2, does the referendum have to be held right now? Why can’t it be done in the future when there’s a specific TAD option on the table?
Not positive, but I believe we can’t ever have a specific TAD option on the table without first allowing the possibility of such options (what’s happening now).
“Why was it so hard to get that legislation to allow Decatur to hold a local referendum? Would it be hard to get it again in the future?”
You’ll have to ask the folks under the Gold Dome that question. Things down there happen in mysterious ways.
Is that really the wording on the ballot? Jeez. I’m inclined to vote no simply on the principle that voters should have some clue what they’re voting for.
Trying to decipher: This would move to authorize public debt (bond) to subsidize a tax break for developers, so as to create an incentive to develop otherwise unattractive blighted areas. Am I close? I’m not aware of any blighted areas of Decatur in 2010. Why not wait for the market — this remain, I think, a very attractive city — and keep the tax revenue? Why give that revenue up for the 25-30 years of the bond?
Besides, how about a time-out on increasing Decatur’s public debt? We haven’t had such a history of big borrowing in the past, have we? By my quick math, the City’s debt has increased about six-fold in the last four years.
Remember that, prior to the bond issue, the City had not done any major borrowing in over 30 years.
I’m not aware of any blighted areas of Decatur in 2010.
The Big H property in Oakhurst, the East Lake MARTA area, the Church Street corridor north of Ponce, the stalled out Trinity Triangle, the former Devry Campus, East College (the part that Decatur wants to annex) come to mind right off the top of my head as places where a TAD might be appropriate to spur development.
With all due respect, what makes the East Lake MARTA station vicinity seem bleak is the Bellsouth properties (now AT&T, I guess). That huge, blank building that looms over the SW corner of East Lake and Park Place, and the compound that wraps around the SE corner of E. College and the little spur street I don’t know the name of (runs in front of Condor Automotive). The storefronts in the little strip at that corner are all occupied. The ones on the west side of the MARTA station are in Atlanta.
I agree. Wouldn’t it be great if AT&T moved elsewhere and someone could build some sort of transit oriented development with housing and retail right next to the MARTA station? It would smart, promote transit and the environment, and I bet some of our senior neighbors would be interested in such a development.
Something like that might be ripe for a TAD.
Seriously Marshall do your really think the property you mention is ‘blighted’? Why a tax break for the property owners that missed the last bubble? Perhaps a little less development right now would help the tax value of the property already on the books. I’m really just curious.
Not sure, but I believe that’s a telephone company central office. They cannot simply “move elsewhere.”
meant to describe the AT&T compound as wrapping around the corner of WEST College and the little spur street.
I’m with you Judd for exactly the reasons you mentioned.
DM and Kyle, thank you for covering! I had no idea this was even on the ballot!
Why couldn’t they move Parker Cross? I’ve heard on and off that they wanted to sell the property. And yes, Pat, I think that area is blighted with the exception of the Wahoo strip.
I’m not meaning to pick on you Marshall. I just think you bring up a good point. This type of power should be used in the special circumstance where normal market forces don’t work. I just don’t think that Decatur has any ‘blighted’ areas any more.
Doing a quick google search I was able to find Ohio’s definition of blighted. I’m guessing Georgia’s about the same.
“Blighted area” and “slum” mean an area in which at least seventy per cent of the parcels are blighted parcels and those blighted parcels substantially impair or arrest the sound growth of the state or a political subdivision of the state, retard the provision of housing accommodations, constitute an economic or social liability, or are a menace to the public health, safety, morals, or welfare in their present condition and use.
Marshall, a telephone CO is the termination point for literally thousands of pairs of copper wire and hundreds of fiber optic circuits. You can’t just pick those up and move them.
THEY WANT TO MOVE PARKER CROSS? WHAT? I know my property isn’t all it could be but the mortgage is paid and I’m quite happy here.
Oh, wait, I misread the comment.
Never mind.
What Steve said above is correct but I’d change the number to tens of thousands. The Central Office or exchange is the termination point for every pair of telephone wires in the area. Hard wired, from your landline at your house or business to that office. You can almost always spot the buildings by the absence of windows, they are built to be almost indestructible, the one I worked in many years ago had 4′ thick exterior walls. This all sounds almost quaint, doesn’t it, in our wireless world?
BTW, and who knows when this information may come in handy, they are generally thought of as good places to be in the event of a nuclear attack.