Beltline, TAD projects: One lawyer’s opinion
February 11, 2008 at 1:04 pm by Thomas Wheatley in NewsTax allocation districts, or TADs, are complicated issues and becoming increasingly popular. As of 2007, four cities in Georgia have utilized TADs — Atlanta, Acworth, East Point and Marietta. Atlantic Station? That was built largely thanks to a TAD. Here’s a good definition of what a TAD is and does, pulled from a recent study by the Livable Communities Coalition, an Atlanta-based policy group:
TADs have soared in popularity in recent years because they promise a relatively painless way to pay for public projects needed to lure or enhance private investment, especially in areas that might otherwise not attract such development. Bonds are typically issued to pay for the projects. The bonds are then repaid with property taxes generated by rising real estate values associated with the new development. As soon as the bonds are paid, the new tax revenues revert to cities, counties and schools.
So how might this morning’s decision by the state Supreme Court affect existing and future TADs? It’s highly unlikely a judge would want to go in and unravel existing TADs. Many have already cleared the bond-validation process. I received an interesting e-mail from a source that passed along a lawyer’s take on this morning’s decision. I’ve granted anonymity to both sources. Please keep in mind this is one lawyer’s opinion.
Existing TAD bonds should be OK, because in those cases the bond validation proceeding was concluded and not appealed. Under Georgia law, the validation hearing conclusively cures any potential defects in the bond issue, so that the purchasers of the bonds have the assurance they will be repaid.
Under the Woodham case, the conclusion of the validation hearing was appealed, so the bond issue may not go forward to the extent it includes the pledge of school tax revenues. There is nothing to prevent the “downsizing” of the bond issue to include only City and County revenues. So – the Woodham case effects the BeltLine bond issue that was the subject of the appealed validation hearing in Fulton Superior Court, as well as all future bond issues.
February 11th, 2008 at 5:03 pm
in laymans terms – use the money for the purpose you set up the TAD? no problem.
February 11th, 2008 at 5:14 pm
If downsizing the TAD is possible and they choose to do that, it appears that they will have to deal with losing approximately 54% of the expected tax revenues, according to this text from a flyer on Atlanta’s property tax breakdown:
“of every property tax dollar collected, 21 cents goes to the City of Atlanta. The remaining 79 cents support the Atlanta Public School System (54 cents), Fulton County (24 cents), and the State of Georgia (1 cent).”
That’s as of 2007; here is the flyer:
http://www.atlantaga.gov/client_resources/government/finance/property%20tax/2007%20property%20tax%20facts%20flier%20-%20technical.pdf
February 11th, 2008 at 6:08 pm
I just have to say that the development of atlantic station is not the best example of healthy development , perhaps a bad example of how tads are used and abused, and i shutter to think that the beltline would look or function anything like atlantic station, anyone remember the truman show? that’s how it feels to walk through atlantic station…but with more parking structures.
February 13th, 2008 at 9:50 pm
Atlantic Station is THE model of how TADs should be used, no question about it.
Like it or not, Atlantic Station is better than an old dilapidated steel mill in the middle of Atlanta. Yeah, that was real healthy. The smoke stacks polluted this City for almost 100 years.
Hey MTM, I gotta ask, did you just move here within the last two years?