On November 4, 2014, Brookhaven residents will be asked to vote on the Referendum which will grant Redevelopment Powers Law (RPL) authority to Brookhaven City Council, as defined in SS36-Chapter 44 of the Georgia Code.
The primary impact of granting this power is that the BCC will then, without any future input by the citizens of Brookhaven, be able to establish a Redevelopment Authority, which will have the power to establish Tax Allocation District(s) at its discretion.
These powers include the ability to:
If the citizens of Brookhaven hypothetically approve said referendum, they will NEVER again have any oversight or input into any aspect of the TAD.
The referendum transfers unlimited power to City Council to exercise the Redevelopment Powers Law, which is the legislation that establishes the right to set up TADs. Once such a referendum is approved, there is no point in any future planning or processes that allows or mandates citizen’s input. Any negotiations are between the Redevelopment Authority and involved parties, such as Developers, sources of finance, owners of property in the TAD, overlapping governmental entities and jurisdictions (such as school Boards), etc.
This Referendum is on the ballot because it was authorized by House Bill 1136.
The most recent and relevant analysis of the impacts of TADs in Georgia is found in “Georgia’s Redevelopment Powers Law: A Policy Guide to the Evaluation and use of Tax Allocation Districts”, authored by Carolyn Bourdeaux and John Matthews of Research Atlanta at Georgia state University.
Cities and Counties frequently have areas that are considered “Blighted” and the jurisdiction will desire to redevelop the area. Because the blighted area is considered to be inherently economically undesirable, it is believed that Public funds must be used to facilitate the redevelopment of this blighted area.
Since it is further believed that redevelopment of the blighted area will increase the property values of both the blighted and surrounding areas, this future revenue stream (increased property taxes) can be used to facilitate the redevelopment plan by the issuance of bonds which are secured by this increase in property taxes.
Georgia has recently passed legislation that also allows other types of taxes, such as sales taxes to pay the interest on TAD bonds.
TAD funding works by designating an area in which the redevelopment will occur, calculating the value of the property within the TAD area, and then capturing the increase in the revenue stream and using this increase to pay the interest on the TAD bonds that are issued.
The first step of the process is to declare an area “Blighted”. This term is so deliberately vague that it can mean anything. By designating an area “Blighted”, the Redevelopment Authority gains justification to establish a TAD to address and correct this blight.
The next step of the process is to determine that the blighted area would NOT be re-developed without public funding. This finding represents the “But-For” clause, which means that redevelopment would not occur But-for the subsidization provided by Public funds.
TAD funds are allowed under Georgia law to be used for any purpose. The allowed purposes can include:
Since the TAD area will include overlapping jurisdictions (City, County, School Districts and Special Districts), each of which receives property tax revenue, these jurisdictions must agree to forego the increased tax revenue that each would accrue due to property appreciation, and instead allow it to be used by the Redevelopment Authority to pay the interest on the TAD bonds.
Cities and Counties like the concept of TAD’s because they offer:
While politicians and Developers like the money that TADs provide, there are numerous negative impacts of TADs. These include:
Ideas conceived by the Municipality to address their own list of priorities have generally fared more poorly than market-based projects. It is not surprising that municipality-conceived projects require public funding for the very reason that they do not make economic sense and would not occur otherwise.
Market-based projects that require some infrastructure assistance for improvements as noted above may make some sense.
The City of Roswell received RPL approval from the voters in November 2010. The reason that Roswell City Council sought this approval was to be able to provide infrastructure assistance IF a developer came forward with a project that benefitted the city AND would not have occurred But-for TAD funding. Since gaining this approval, NO project has been considered.
This is evidence that Roswell City Council did not seek RPL powers to implement a pre-determined redevelopment plan.
The City of Roswell placed a referendum on the 2010 ballot seeking approval of the Redevelopment Powers Law.
The City Council only sought RPL powers to provide a “Tool” to facilitate a redevelopment project that MIGHT be brought forth by a developer that would benefit Roswell. City Council made it clear that they had no list of projects for which they desired to RPL powers for financing.
City Council also made clear to the residents that funds would only be used for infrastructure improvements such as sewer, water, utilities, parking, roads, etc. No money could be paid directly to the developer of a project to have the effect of increasing the profitability of a project.
Roswell City Council also added mechanism into the RPL which mandate Public input at every stage of any TAD process. This requirement is not included in SS36-44, and is not included in the Brookhaven Referendum. It was confirmed that absent the language and commitments that RCC made, once a RPL Referendum is approved, there is NO future point for meaningful Public input.
This is a key difference in the approach taken by Roswell City Council compared to Brookhaven.
Another key difference is that Roswell City Council spent more than two years educating the public on exactly what the RPL was, and how it would be managed and stated that there were NO projects which were planned at that time.
Records of the minutes of City Council meetings are available from Marley Press-Roswell City Records Manager. These will confirm the length of time that RCC educated the public.
The process used by Brookhaven stands in stark contrast. The motion to place the Referendum on the ballot was introduced at the City Council meeting on July 29, 2014 and passed. . No more than five minutes were spent discussing any aspect of the Referendum, nor was any mention made of the power to create TADs that the approval would provide.
Also in contrast to Brookhaven, Roswell placed a $14 million bond referendum on the 2012 ballot, which was approved by the voters. These proceeds were used to build “Infrastructure” such as a library, fire station, natatorium, etc. The funds were not used for Redevelopment.
Roswell was able to finance these infrastructure improvements with a General Obligation bond because Roswell’s credit rating is excellent. Roswell obtained a 1.3% interest rate on these bonds.
In contrast, Brookhaven does not have the financial capacity to finance infrastructure improvements the same way. Instead, they MUST utilize alternative financing, which is more expensive. TAD bonds would be 2-3 times the rate of the Roswell General Obligation bonds.