For more than two hours Tuesday morning, Columbus Council listened to three experts from Atlanta outlining the advantages of Tax Allocation Districts, an economic development tool that allows newly created tax revenue to be plowed back into specially designated areas for infrastructure improvements to encourage redevelopment.
The topic is timely because Muscogee County voters will be asked in November to give council the authority to establish these districts, commonly called TADs. It is the second time the question has been put to local voters. A TAD referendum was narrowly defeated in 2007 during a special election where it was the only item on the ballot.
In 2007, there was little information put out by supporters of the TAD. But it will be a different deal this year, Mayor Teresa Tomlinson said.
A group called Revitalize Columbus Communities has been established to campaign for the TAD. Local real estate developer Philip Thayer and the Rev. Willie Phillips, a community activist, will lead the group that is also being supported by the Greater Columbus Georgia Chamber of Commerce’s young professionals group.
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“You will see this ramped up,” Tomlinson said.
Chamber President Mike Gaymon said the city and chamber made a decision seven years ago not to be out front in the campaign for the TAD.
“It almost passed — I think it failed by 250 votes — without any effort,” Gaymon said.
Former Atlanta Mayor Shirley Franklin, current Atlanta City Council President Cesar C. Mitchell and consultant Ken Bleakly, president of the Bleakly Advisory Group, spoke to council during the work session. TADs have been used successfully in Atlanta to redevelop Atlantic Station, the East Lake neighborhood, and is being used in the Atlanta Beltline project.
More than 70 cities and counties in Georgia have used TADs since the General Assembly approved them in 1985.
“This is a mechanism to transform an area,” Franklin said. “I don’t mean patch it. I mean transform it.”
Here’s how it works:
First, the voters must approve a law that would allow such districts.
Columbus Council will have the authority to establish the districts within the city limits. Districts can be targeted to a several block area, such as the Liberty District near the jail, or it can be broader.
Any additional property tax revenue over what the tax revenue was when the district was created goes into a special fund that is not part of the city’s general fund. As an example, if an area generated $1 million in property tax revenue before the district was established, then generated $2 million the year after a TAD was approved, $1 million would go into the TAD fund. The other money would go into the city’s general budget.
The TAD money can be used to build roads, put in sewer lines, streetscapes and other infrastructure to attract additional development.
The city would have the option to pay for the projects as the TAD revenue comes in or to borrow money and repay the bond debt with the TAD revenue.
“What this does is help open a site up for redevelopment,” Bleakly said.
Councilor Gary Allen expressed concerns about how the bond debt would be paid if the TAD revenue fell short. Bleakly told councilors that was a risk bond holders took and money would not come out of the general fund to cover any potential shortfall.
“If the money is not in the fund, they don’t get paid and they understand that risk,” Bleakly said.
About 85 percent of the money in a TAD project, whether it is retail or residential, comes from the private developer, Bleakly said.
Franklin said TADs are a powerful tool in driving economic growth to depressed areas.
“The developers get the things they need to make this work, and in our case the city of Atlanta got a lot of the things we needed such as roads and fire stations,” said Franklin, who was Atlanta mayor from 2002-2010 and had worked for years in previous city administrations.
An example of a TAD that worked in Atlanta is Atlantic Station, a 46-acre steel mill site. It has been redeveloped into a mixed-use commercial community.
Before the TAD, Bleakly said, the site generated about $7 million in tax revenue. After about $1 billion in public-private investment, the site has produced about $400 million in tax revenue, Bleakly said.