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Local leaders investigate TAD options, process

Editor’s note: This is the second of a two-part look at Richmond Hill’s plan to use tax allocation districts to help fund growth.

If all goes according to plan, Richmond Hill voters will get to decide in November whether they want city leaders to establish tax allocation districts to help pay for “infrastructure before growth,” which has become a mantra of sorts for Mayor Russ Carpenter and the City Council.

Two weeks ago, Richmond Hill consultant Ken Bleakly met with city representatives and Bryan County officials to explain how the tax allocation districts (TADs) would work and who’s using them.

For starters, Bleakly said, TADs have been around since 1985 and Georgia law allows local governments to decide whether or not to create such districts, and determine how they’ll be used, all under the state’s Redevelopment Powers Law.

Bleakly said 49 states – all but Arizona – and the District of Columbia have some form of TAD, or tax increment financing, to help fund infrastructure improvements.

More than 75 counties and cities in Georgia have approved their use, and since 1991 more than $500 million in bonds have been issued under the program. Every major city in Georgia has at least one TAD – and Atlanta has 10, according to Bleakly. Nearby, both Savannah and Statesboro have TADs.

How they work

Inside a TAD, a city establishes a baseline using the assessed value on existing property in the district, and taxes collected on that base amount continue to go to various governments. So do sales taxes and ad valorem taxes on vehicles and other property. In the TAD, the city can issue bonds or take out loans to help fund infrastructure in the district, with all additional property taxes above the baseline – i.e., property taxes on new development – financing the loans or bonds.

Excess property taxes go back to the governments along with taxes over the base. Bleakly used the example of a tax allocation district with a baseline value of $1 million, currently getting $35,000 in city, county and school tax revenue. After new development, the TAD has a value of $6 million, which after subtracting the base $1 million, has an incremental value of $5 million, generating $175,000 in property taxes to pay back bonds or loans.

TADs in Richmond Hill

Areas mentioned as candidates for TADs in Richmond Hill include two of its soon-to-be three interchanges on I-95 – the one already in existence at Highway 17 and the one under construction at Belfast Keller. But TAD funds can only be used for infrastructure or other capital projects, and not for operation costs. For example, Bleakly said a TAD can finance a fire station but not pay for the firefighters to run it.

Buy-in for county is optional

Bleakly, whose consulting group has worked with governments in Georgia and other states, said there are a number of benefits to TADs, including investment in a community to the tune of $7 in private funding for every $1 invested. He also said it will grow the tax digest, helping cities, the county and Bryan County Schools operate.

Both county and school leaders will have to approve a TAD, though, to receive incremental taxes. It also appears the city can go it alone, but officials want buy-in from other governments. Statewide, the county participation in TADs is over 90 percent, Bleakly said. At Monday’s meeting, County Commissioner Noah Covington said TADs appear to be “another tool in the toolbox,” to help pay for infrastructure.

Growth vs. growth

Bleakly said during the meeting that TADs can help “jump start,” and “accelerate” growth inside a district’s boundaries, which can spread to areas outside the districts.

That prompted County Commissioner Brad Brookshire to ask, “Are we really trying to accelerate growth?” noting the county’s residential growth has far outpaced commercial growth.

That growth has led to traffic congestion and increases in the demand for services ranging from EMS to schools without corresponding growth in the tax base to help pay for them.

Richmond Hill officials said Monday that TADs can help attract more commercial development, and the TAD can be structured specifically for commercial growth.

But it’s important to look at avenues, Richmond Hill City Manager Chris Lovell said.

“Growth is one problem we’re going to be dealing with for the rest of our lives,” he said, adding that local governments can continue to play catchup or try to put infrastructure in place first through measures such as impact fees or TADs.

The process

According to Bleakly, the next step is up to the General Assembly, which will have to approve the referendum. That’s expected.

Afterward, the city will hold a referendum. Richmond Hill is already aiming toward getting it on the ballot this fall.

If voters say no, then it’s over unless officials try to get it back on the ballot.

If it’s approved, then the next step is to define boundaries for the TAD, including a second TAD if desired, create a redevelopment or development plan and hold public hearings.

The City Council would then have to approve the TAD, then negotiate with county and school board officials before forming the TAD.

What’s more, Bleakley said TAD bonds are structured to ensure taxpayers aren’t on the hook should the economy sour and development in the TAD not meet projections. He called the process “deliberative,” and “conservative,” and there were no defaults on bonds during the recession.

Should voters approve the TAD in November, it seems possible city officials could establish one or more of the districts in Richmond Hill by January 2020.

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