To Tad or Not to TAD - What are Tax Allocation Districts and Should Peachtree Corners Make Use of Them?

Last week Patch reported on the city's plans to seek redevelopment powers in order to stimulate development in the Holcomb Bridge Rd corridor. Much of the article centered on the proposed use of TADs (Tax Allocation Districts) to accomplish redevelopment goals, but didnt go into much detail about what a TAD is and how it works. Hopefully some of the following information will be helpful.

Tax Allocation Districts are sometimes called TIFs (Tax Increment Financing) because they are based upon the incremental increase in tax revenues. Basically, the city designates an area as blighted, or economically underdeveloped. It then issues bonds to raise money specifically for making improvements within the TAD. These improvements are usually in the form of infrastructure- roads, sidewalks, sewers, stormwater drainage and even public transportation. The public improvements the city makes coupled with the private redevelopment it (hopefully) spurs cause property values in the TAD to rise. As the property values rise, so does the amount of money those properties pay in property tax. That increase in the amount of taxes paid is put in a special account and used to pay off the bonds. 

Although TADs have been in use for years, the jury is still out as to how well they work. Many point to Atlantic Station as a great example of a TAD at work. The site of the former Atlantic Steel plant was designated as a brownfield; the old steel plant was an eyesore and the land around it was polluted from the fallout of years steel production. In 1999 the assessed value of the property was $7 million. The City of Atlanta floated $67.5 million worth of TAD bonds to help pay for nearly $190 million in cleanup and infrastructure improvements to the site. By 2008 the assessed value of the property was $452 million and it was generating an incremental increase in tax revenues of $8.3 million per year to the City of Atlanta- more than enough to pay off the bonds in thirty years. But since then, the economy at large has been in recession. Stores and restaurants at Atlantic Station have closed, condos have gone unsold and apartments have become vacant. The area has developed (no pun intended) a reputation for cruising and crime. A real estate professional and resident of Atlantic Station likened it's downward spiral to Underground Atlanta. The accompanying drop in property values has reduced the amount of 'incremental increase' in taxes to the city. Time will ultimately tell if it is successful.

A TAD to redevelop residential areas near 'the square' in Marietta is facing similar difficulties. As a result of the recession, several of the developers involved have gone bankrupt leaving some of the area undeveloped. Those who bought 'early' have seen their home values decline and the city has seen tax revenues decrease, although not enough yet to put the TAD bonds at risk. As with Atlantic Station, time will tell if the TAD is successful.

Sometimes there are other municipal costs associated with a TADs that are not covered by the increase in tax revenues. The increased development may create an increased need for services like police and fire. Since the funds generated by the TAD are earmarked to pay the bonds, the increase in the cost of services is borne by the city.

 

What happens if the TAD doesnt live up to expectations? The AJC reported a couple of years ago that the taxpayers of Kansas City were stuck for $6 million in 1999 for a TAD gone bad. In Georgia, the laws regarding the use of TADs are much stricter. Cities are not allowed to pledge general revenues to back the bonds. The investors who buy the bonds bear the loss if the bonds default. John Matthews, a professor of policy and planning at Georgia Tech has studied and written extensively about TADs. In the event of a default he believes that "bond ratings could suffer and interest rates rise" on future bond issuances, and he says that cities are seen as having a "moral" duty to guarantee the bonds.

 

Unanswered as yet is what Peachtree Corners would do with a TAD given that the municipal contribution to the TAD is infrastructure improvement. As a limited services city, Peachtree Corners cant build roads, sidewalks or sewers and cant run buses or trolleys. Does the Redevelopment Powers Act give them these powers? The mayor claims that it does not. Is Holcomb Bridge Road blighted or economically underdeveloped? I think most would agree that portions of it are unsightly, mostly as a result of haphazard zoning and a diverse collection of architectural styles, but not blighted.

 

Perhaps a CID independent of the city would be better suited to the city's purposes.

 

Originally Published in the Peachtree Corners Patch on March 25th, 2013 by Bob Martell

Major Concerns over Peachtree Corners Council and Mayor Expanding Powers

The city of Peachtree Corners is designated as a very unique form of government - a city-lite.  This is because the city is charted by the state legislature to provide just three services - 1. Planning and Zoning  2. code Enforcement  3.  Trash Collection.  The city has not even been functioning a year and only one of the 3 services is completely operational.  Yet the council and mayor are already looking to expand their powers.  Tonight's city council meeting has two items on it that attempt to do just that. 

1. The council is looking to pass an ordinance removing the second read requirement to pass ordinances in the future. This is a problem because it gives us, the citizens, no time to react to the proposed law before the council can vote it into being. They argue that this is holding up businesses who need zoning changes and that the second read is really moot because they could hold back to back meetings to meet the second read requirement. We are OK with the idea of changing the second read requirement on business zoning issues that have already passed the zoning commission vetting process. We do not want the council's powers expanded to pass any ordinance this way. They may circumvent the requirement by holding the back to back meetings, but then we would at least be alerted to the fact they are up to no good and trying to block citizen input. We want the ordinance eliminating the second read to have tighter, more limiting language.

2. The council wants to expand the charter to allow them to provide a 4th service. The resolution reads "A Resolution of the Mayor and Council of Peachtree Corners, Georgia requesting the local legislative delegation of Peachtree Corners, Georgia to introduce a local law authorizing Peachtree Corners, Georgia to have redevelopment powers pursuant to the redevelopment powers law; and for other purposes."  It appears they will put this on the ballot for a November referendum. We believe they are already breaking their promises to keep this a city-lite with this expansion of powers. We think they should get the other 3 services implemented and running smoothly before they try to convince us they deserve more power and more money to spend.

Add this to the elimination of the second read in item 1 above and you have recipe for all sorts of abuse without the citizens able to react or voice their objections before the council buys land, builds infrastructure or otherwise spends tax money the way they want. 

You can read the full agenda here: http://www.cityofpeachtreecornersga.com/1__2013-03-05_-_City_Council_Agenda.pdf

Should Peachtree Corners Buy the Land Across from the Forum

Originally published in the Peachtree Corners Patch - January 30, 2012


A recent announcement of plans to build apartments on the Roberts property across from the Forum has stirred up quite a controversy in Peachtree Corners.
Commenters on a recent Patch article expressed concerns ranging from worry about the effects such a development would have on traffic, to overcrowding at Simpson Elementary and Norcross High schools, to negative effects on property values.

Whatever their reason, all seemed to agree that they don't want to see apartments built on that parcel of land. Based on the mayor's statement a couple of weeks ago, he and the council are as opposed to apartments in that location as everybody else.

Lennar Homes out of Miami is currently planning to close on the property on Feb. 7th and expects to break ground this spring. As long as they meet the zoning requirements and building codes, the city is powerless to stop them. Any attempt by the city to deny building permits or otherwise stop the project would likely result in a costly lawsuit that the city would lose.
Unfortunately that leaves the city few options: do nothing and allow the development to proceed as planned (which nobody wants); or buy the property and hope to sell it to someone who will develop it in a manner more to the city's liking (which opens up a whole new can of worms).
Given that Lennar already has a contract to buy the land on Feb. 7th, it's too late for the city to buy the property directly from Charlie Roberts. That means the city would have to buy the land from Lennar before they begin construction. Lennar is spending a reported $7.6 million to buy the property. Obviously, they expect to make a profit from the development or they wouldn't be doing it. That suggests it would cost the city a sum greater than $7.6 million to get Lennar to part with the property.

So the main question to the residents of Peachtree Corners is, are you in favor of the city spending $10 million, $12 million or more to buy this piece of land in order to prevent apartments from being built on it?
As I said, buying the property opens up a can of worms. While the charter gives the city power to purchase property, does it permit the city to purchase land for this purpose? Keeping in mind that it could be several years before a suitable buyer is found, are you comfortable that a future mayor and council would follow through on the plan, or do you worry that they could use the land for another purpose (like building a city hall)?

Are you comfortable with the possibility of the city someday having to sell the property at a loss? Knowing it would require the city to continue levying property taxes at or near the (one mil) limit, are you comfortable with the city assuming such a large long term debt barely halfway through its first year in operation?How much would you be willing for the city to spend?
And lastly, what kind of precedent would it set? In the future, will some other property owner propose to redevelop his property in an unpopular manner in the hopes that a public outcry might prompt the city to buy him out?

Do the real and perceived benefits of not having apartments there outweigh those concerns and others?

I have it on good authority that the mayor and council want to hear from residents on this issue. Do you want the city to buy the land in order to prevent apartments from being built? Call city hall at 678-691-1200 or email the mayor and council and let them know your thoughts:
mmason@peachtreecornersga.org
psadd@peachtreecornersga.org
jlowe@peachtreecornersga.org
awright@peachtreecornersga.org
jaulbach@peachtreecornersga.org
lchristopher@peachtreecornersga.org
wgratwick@peachtreecornersga.org
Call and write soon. February 7th is next week.

Written by Bob Martell - PCBC

Review of Peachtree Corners Council Meeting - July 24

City Council lifts the moratorium on business
permits, licenses, etc.

The meeting started at 7:30 PM and did not adjourn until nearly 10:00.  Alex Wright was the only councilperson who did not make the meeting.  About 20 or so people made up the audience.  There were a lot of tedious items on the agenda.  A team of lawyers were present to go over amendments to the zoning ordinance, the sign ordinance, the Intergovernmental Agreement with Gwinnett, the contract with a zoning liaison, and the moratorium on building permits.  One businessman spoke during the public comments period about his need for a the last of his permits so he could open his new restaurant. He expressed frustrations at being stymied by the moratorium.  The mayor, after telling the man that he was not supposed to respond, responded to let the man know that the moratorium was on the evening's agenda.


The highlights of the meeting included the lifting of the moratorium on building permits, business licenses, etc. that have been frozen since May 1.  Everyone in the room was excited to see this business stifling moratorium lifted.  It is expected that the county will begin processing permits on behalf of the city today.


The other major item was the introduction and distribution of an application to be on the Zoning Commission or Zoning Board of Appeals.  The Mayor assured the audience that zoning would be done differently than in other cities.  The commission and appeals board are not to be political appointments but rather a citizen panel of qualified people with the best interest of the city at heart.  The Mayor promised broad representation from across Peachtree Corners.  The application is due on August 4th.  Click Here to download a copy.


The very last thing addressed by the council was a matter of litigation.  Apparently, a billboard company wanted to install a billboard on Peachtree Parkway near the Forum and is suing Gwinnett for some supposed procedural violation due to the moratorium.  I will not pretend to understand the legalese involved.  Bottom line is that the city has retained legal counsel to assist in dealing with this pending lawsuit.


Most of the meeting was dedicated to reviewing phrases and wording in various ordinances and agreements.  The council and lawyers tweaked little phrases and parts of ordinances in use at Gwinnett before they were adopted by the city.  It was detailed and tedious.

Peachtree Corners Detailed Budget Proposal

The proposed budget for Peachtree Corners fiscal 2013 is now available.  Click here to review the budget and see how the council plans to spend $2.7 million of your money.  


The next 3 council meetings: June 14, June 19, and June 26 are all expected to deal with the budget, expenses, and proposed taxes to fund it all.  Please come to all the meetings you can.  They are held at the YMCA at 7:30 PM.

Review of June 5 Peachtree Corners City Council Meeting

The Peachtree Corners City Council met Tuesday night, sans Post 1 councilman Phil Sadd. This is the third or fourth meeting he has missed, and we're not even a city yet...Doesn't bode well for District 1.

There were about 30 residents in attendance.  Also present were city clerk Joan Jones, consultant John Kachmar and city attorney Bill Riley and his assistant.

No residents made any public comments, although there was an opportunity to do so. The mayor introduced the city's new 'comment card' which the public will fill out beforehand and then the mayor will call on you...the card includes your name and address and the purpose/ subject of your comment. He explained this is for keeping track of comments for 'open records' purposes.

Next item - the council accepted the invitation to join the Georgia Municipal Association free of charge. Normally, membership would cost approximately $10,000 for a city our size but the GMA offered to waive the first year dues.  Jay Lowe stipulated that they would agree to first year free, but any subsequent years would need to be voted on before committing monies to join. The rest of the council agreed with Jay.

The first and main agenda item was a presentation on call centers from Kirsten, a '311' expert from CH2MHill...The presentation lasted about 40 minutes and it was obvious from the reactions of the council and the residents that it was overkill. She made the presentation based upon her experience running the call centers for Sandy Springs and Johns Creek (big surprise there!) and didn't seem to grasp the concept of 'limited services city'.  During the discussion after the presentation, under pressure from Alex Wright and Jay Lowe, consultant Kachmar finally conceded that CH2MHill's solution would likely cost the city about $150,000/ yr.  Even the mayor seemed a little taken aback at the size of the number.  It also pretty much killed the call center discussion for now.

Next item - consultant  Kachmar updated the council on the search for a city manager, saying they had received 48 resumes so far, many from out of state candidates.

Next item - city hall...the council have visited several sites and had basically narrowed it down to two locations, both in Tech Park.  One site has approx 5000 sq ft of space, and would need a bit of 'build out' to accommodate the council, staff and meeting areas...because of that, the 'rent' would be approx $20/ sq ft.  Site 2 has approx 8000 sq ft of space, but is already configured in a manner such that it requires little build out to meet needs, has better access and infrastructure and is available for $14/ sq ft.  The Council decided on site 2, even though it is a little larger than needed.  The attorney and consultant suggested that the council give the okay for them to negotiate the best deal and authorize the mayor to sign what they present.  Alex Wright and Jeanne Aulbach objected, and the council agreed that they should review any lease proposal prior to the mayor signing it.  Good call on their part.

Next item - The council adopted a fiscal yr to run from July 1st thru June 30.

Last item - The council adopted a set schedule for council meetings, effective June 19th, which will announce the schedule for the next few months...the reasons for this were:

• cheaper to put out one announcement now, instead of a new one every week,
• can always cancel a meeting if not needed,
• eliminates the 'problem' they ran into last week where they couldn’t amend the agenda to allow public comment. 

Meeting adjourned approx 9:15.

May 22 City Council Meeting: A Bait and Switch?

The City Council met Tuesday night to receive updates from the two consultants the council has hired to help set up the city.  John McDonough, current Sandy Springs city manager, and John Kachmar, current Johns Creek city manager, took the council through the agenda: 

• Search for City Hall Office Space 
• Request for Proposal (RFP) for Banking Services
• Review of Legal Requirements and Timeline for Ad Valorem Tax Billing and Collection
• Organizational Structure of the City
• Neighborhood and Business Response Center Services 

The most enlightening and alarming item discussed  was the Organizational Structure agenda item.  The consultants provided a draft/sample budget for what it will cost to run the city.  Given the size of the staff and the services expected, they are estimating $2,869,225 to run the city.  This is nearly FOUR times the cost estimate in the Carl Vinson study touted by the Vote Yes group and State Senator and city sponsor Tom Rice during the cityhood campaign.  Alex Wright, Post 3, was visibly baffled by the idea that the two estimates were not even on the same planet.  Mayor Mason, a major player in the Vote Yes campaign, dismissed the study just short of rolling his eyes at the idea that anyone would believe it.  He said that The Carl Vinson study is not a budget it is just a feasibility study.  It was for Tom Rice and the legislature and not meant to determine the cost to run the city. 

Mr. Wright questioned the consultants throughout the tax and budget presentation.  The consultants recommended building up large reserves and contingency funds to which Mr. Wright responded, “It is against my personal philosophy to build up large reserves. I want to prevent government waste.”  The consultants scoffed at the idea that any waste would occur in government.  

At the current $2.8 million cost estimate, the city will need the full 1 mil in taxes allowed by the Charter.  All the Vote Yes promises that property taxes probably would not be needed at all to cover the expenses of the city are so quickly up in political campaign smoke.  The city council must vote on the exact level of millage that property owners will pay.  Before the vote, the council must advertise the millage rate under consideration and hold 3 meetings for the public to comment before the vote.  The consultants recommend advertising the full millage allowed by the Charter.  Councilman Wright seemed to bristle at the idea that so much would be needed given the Carl Vinson study.  The consultants assured him that it was the conservative and responsible way to go about it and their later budget discussion showed why.  The advertisement will occur on June 21.  The first hearing will be the morning of July 2, the second at 6:30 PM July 2^nd, and the final meeting and vote on July 9^th at 7:30 PM.

During this discussion, Mr. Kachmar let it be known that the councilpersons and mayor are not required to attend the hearings on the 2^nd.  They may assign staff to take down public comments.  The PCBC is greatly disturbed by the suggestion that our elected officials would delegate listening to their constituents to hired staff and consultants rather than be present themselves and hope that they all reject this suggestion.

We also hope Mr. Wright sticks to his guns on expenses and taxes.  We hope he recruits some other council-members to stand firm against the mayor and the consultants on dismissing the Carl Vinson study, absorbing the full one mil in available taxes, and on stockpiling massive amounts of money for “rainy days” and nebulous “community investment projects”.  

Other items covered in the meeting:

The consultants presented a list of properties for the council to consider renting.  They reviewed their evaluation criteria.  4 of the 5 properties are in Tech Park.  They expect to make a final recommendation at next week’s meeting.

The RFP for city banking services was provided.  Councilman Weare Gratwick, At Large Post 6, excused himself and left the room during the discussion.  Mr. Gratwick works for a bank and wanted to avoid any accusation of impropriety or undue influence on the council discussions.  The RFP will be released in the coming days.  Ms. Jeanne Aulbach, Councilperson At Large Post 4, will serve on the RFP evaluation team with the consultants and lawyer.

They ended the session with a rushed discussion of a call center to respond to citizen inquiries.  The YMCA was shutting its doors so the council was instructed to think about the kind of services they want to provide and what a call center might do for a later discussion.

Councilpersons in attendance: Jay Lowe - Post 2; Alex Wright – Post 3; Jeanne Aulbach – Post 4; Lorri Christopher – Post 5; Weare Gratwick – Post 6; Mike Mason – Mayor.  Phil Sadd – Post 1 was not in attendance.