Provide Appropriate Funding Mechanism
"A 'TAD' too many taxes" — by Michael Dudich

There is no question that the city of Atlanta wants for many things. Few would argue that for a city of this size, Atlanta is short on green space and light on public transportation. So when a project like the Beltline gets floated, it is easy to see why so many people are eager to jump on the “train” and endorse the plan.

What’s not to like about a project that creates a 22-mile long “emerald necklace” of parkland, walking trails, and bike paths? How do you find fault with resurrecting abandoned rail lines to expand mass transit? Unfortunately, for all the positives, the Beltline faces a stumbling block common to most major public works projects – money. In this case it’s a whopping $2 – 3 billion price tag.

Now you may be saying to yourself, “Wait, haven’t they found a solution to pay for the Beltline Project? Can’t the city simply create a tax allocation district (TAD) encompassing the Beltline? It would then in effect pay for itself, costing city residents little to nothing, right?” To answer the question of who pays for the Beltline Project, it’s important to understand the basic workings and rationale for TADs and to consider not just the direct costs of such a project, but the indirect costs as well.

How TADs Work

TADs are established to finance redevelopment activities in under-developed areas. This occurs by pledging future incremental increases in property tax revenues generated by the redevelopment. The theory is that without a catalyst, the areas would not be seen as desirable candidates for development. The amount of property taxes generated before the TAD designation still go to the other taxing districts (city, county, school) in the same manner and amount as they did before the TAD. Simply said, all the upside stays in the TAD for the designated time period. This number has been as short as five years and more than 25 years in some instances.

The Georgia State Legislature formed TADs with good reason. They do, in fact, create short and long-term benefits. However, hidden deep within the often touted upside, there is an unspoken but very real downside – the restrictions on how TAD revenues can be used.

Each TAD is defined by geographic area, and the incremental taxes generated must be used within that area for legally defined purposes. Those purposes include capital costs for construction of, or improvement of public works and other directly related costs. The rub comes in what the TAD does not pay for. No monies are authorized to offset the strain that residents of newly created housing and users of new retail/commercial space put on existing city services (police, fire, public works, infrastructure, etc.)

Even though the TAD does not provide revenue for these things, the demands of these new users must be met. This necessitates that existing property owners outside the TAD boundaries, subsidize those living and doing business inside the TAD. Huge parcels of vacant land morph into thousands of consumers of city services, yet no monies are set aside to pay for it. Welcome to the dark side of the TAD!

Setting Boundaries

Now, let’s go back for a moment and talk about the reason that TADs were created. They are designed to serve as a catalyst for growth in areas that generally have blighted conditions. Clearly, among the 22 miles of the Beltline, there are parcels that meet these criteria. However, there are other areas that may be sucked into the TAD that clearly would have been developed regardless.

First and foremost, there is City Hall East. It went on the development block long before the Beltline project became the focus of the Atlanta Development Authority. Think about the impact that a project of this magnitude will have on infrastructure and services. If it ends up in the Beltline TAD, it would mean thousands of new residents to care for and scarcely a property tax penny to pay for it.

The second parcel is the area recently acquired by the development company controlled by Wayne Mason. The act of facilitating the Beltline Project with land donations and right of way allowances should not be construed to mean that development of these parcels is contingent on it happening. Mason’s company has made it clear that they plan to move forward regardless. Accordingly, one could question the appropriateness of including these parcels in a Beltline TAD since no catalyst was required. If it is included, we again potentially have thousands more city service consumers, and no revenue to help deal with it.

The old mill on North Avenue (The Masquerade) is also a target. This property is slated for condos, and development is not contingent on the Beltline. So, should it be excluded from the TAD? Plus, just in the past week, a proposal has been floated for the intersection of Ponce de Leon Place and Ponce de Leon Avenue (the site of the current Paris on Ponce) for 450 condo units. The fact that a piece of property abuts the tracks should not automatically make it a part of the TAD.

Now just to be fair, some revenue generated from development associated with a TAD does flow into the city’s general fund. It comes in the form of sales taxes, and business revenue taxes. This certainly helps offset the burden. Whether or not this is adequate is a question best answered by the city’s finance department. However, if the city can’t generate enough operating revenue from these sources, then higher taxes, increased fees for services or cut backs are inevitable.

Unfortunately, the very fact that these properties are independent candidates for development makes them prime subjects to be pulled into a TAD. We have already heard the rhetoric of how they can “jump start” the Beltline Project. It could be in the best interest of the TAD-less to vigorously challenge their inclusion. The problems flowing from their development fall squarely on the surrounding neighborhoods. So shouldn’t the revenues they generate be available to help deal with those problems?

Next Steps

The Beltline is an exciting project, but unlike sewer reconstruction, it is a “nice to do”, not a “need to do.” Accordingly, we should make sure that the discussion surrounding it is comprehensive and realistic. There will be problems and issues that need to be dealt with, well before the promise is kept. Asking questions and seeking answers should not be construed as being against the Beltline Project.

Atlanta’s mayor has appointed a BeltLine Transit Panel to review transit options and to offer recommendations, which are forthcoming. The mayor has also created the BeltLine Partnership to bring together stakeholders.

Public input into the transit plans is vital and necessary to ensure that the introduction of new public transportation improves city life.

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 Article, Just Do It! Put the brakes on irresponsible urban development. Sign the BNC Petition now! Article, Maintaining Greenway. BNC carefully monitors current proposals by consultants. Article, Retain and Enhance Existing Parks. Preserving Atlanta's “Emerald Necklace”. Article, Preserve Historic Neighborhoods. Respect “step-down” scale of development. Article, A “TAD” too many. Appropriate funding mechanism needed. Article, Traffic Management Addressed. BNC proposes phased approach. Link, Subscribe here to be on the BNC Action Alert List! LEARN MORE. Other related articles.
Subscribe to Action Alert List BeltLine map enlargement Read about the BNC petition, then add your signature. Retaining Atlanta's Emerald Necklace Preserving Atlanta's Historic Neighborhoods Traffic Management Addressed Appropriate funding; another TAD? Maintaining the BeltLine's Greenway