Category Archives: Finances

December 18, 2015 – At this Tuesday’s Board of Commissioners’ meeting, the Board approved an Intergovernmental Agreement (IGA) with Doraville regarding the Tax Allocation District (TAD) for the former GM Plant site. The Commission approved the TAD earlier this year. The IGA sets forth how the TAD will function and sets out the infrastructure improvements that can be financed by TAD revenues.
So, what is a TAD? How does it work?
A TAD is a defined area where real estate property tax monies gathered above a certain threshold for a certain, finite period of time, can be used for specified improvements in the defined area.The property taxes collected by all governmental entities (city, county, and/or school district) that participate in the TAD continue to be paid to those entities. The TAD does not decrease or abate taxation on this property. As improvements are made and development occurs on the property, its value will increase. The tax that is paid on the increase in the value, gets paid, and accrues into the TAD account. Those funds can only be utilized pursuant to the Intergovernmental Agreement (IGA) that designates the projects for which TAD funds can be used.
Let me be clear: Every dime of property taxes for this property must be paid. The TAD does not change that. The taxes that are paid today on that property will continue to be paid directly to the city, county, and school district. The taxes assessed on the increase in value of the property, also have to be paid. They go directly to the TAD for specific, pre-approved, directed uses.
The IGA that the Commission approved on Tuesday has numerous stipulations about TAD expenditures. They include a new fire station, water/sewer infrastructure, streets, and storm water management structures. The TAD is set for a period of 25 years but DeKalb has built in a review and reauthorization provision at the 10 year mark.
I want to contrast the TAD and this process with the powers of Development Authorities. Development Authorities routinely discount or abate property taxes all together for a period of time through bond-lease transactions. When Development Authorities do this, the private, business interest sees their taxes reduced or eliminated. The decision is made by an appointed board; not your elected officials. Development Authorities have the power to abate taxes for cities, counties, and the school district without approval from these entities. This just recently happened in Brookhaven when the DeKalb Development Authority (known as Decide DeKalb) entered into a deal to build a new office building at Perimeter Summit. Click here to read about it. The soccer deal was structured with the Development Authority as a tax abatement deal and a cash give away. A TAD is none of these things.
With the TAD, every dime in taxes gets paid, and your elected officials have to approve of the TAD and its expenditures. Development Authority deals mean unelected officials get to eliminate taxes for private interests.
The General Motors property has languished for the better part of a decade. There have been a few attempts to redevelop it over the years but the deals have never come to fruition. Even though General Motors went through bankruptcy reorganization, the Doraville Plant was not liquidated. The plant closed and has been sitting there for over 7 years. The site has such infrastructure deficits and GM demanded such a premium price that any development would need some form of public participation.
The business community and investors have expressed their concerns about DeKalb’s business climate. The GM site redevelopment is one of the largest projects in the Southeast. Successfully redeveloping this area will improve DeKalb’s reputation, bring thousands of jobs to the area, and improve land value; resulting in a larger commercial tax base for everyone.
I have been disappointed to hear some of the comments from the school system about this project. Perhaps more than any other governmental entity, DeKalb School District, contributed to the distress and blight in Doraville. For years, the school district ignored the burgeoning student population and now the schools in and near Doraville have proliferated with trailers. The district as a whole is a negative when businesses are considering where to locate in metro Atlanta. It is ironic that the school district does not appear willing to participate in a revitalization given its history of willfully ignoring the area.
TAD participation by the school district would lead to higher collections of e-SPLOST sales taxes. The district could negotiate for the building of an auditorium large enough to hold graduations with their portion of the TAD. Right now, no such space exists in DeKalb.
I also find it ironic that DeKalb schools would hinge their disdain for this project on their view that “teaching and learning” is their “core business”. A quick glance of the school district’s budgets over the years would show you that DeKalb has failed to ever meet the state’s mandate of spending 65% (at a minimum) of the their budget in the classroom (on “direct instructional expenditures”). I suggest that to be credible in making a statement about the core business of DeKalb County schools, start first by using the taxpayers’ money for what it is intended. Keep in mind that DeKalb has one of the highest millage rates for schools in the state at 23.73 mils. Almost all other districts are capped and can go no higher than 20 mils. Even with almost 4 mils more in taxes, DeKalb School District can’t get 65% of the budget to be spent on their “core business. The old adage – “You get what you pay for” – shows us that more money into the school’s coffers have purchased something far different than “teaching and learning”.
In the School District’s critique of this TAD, they mentioned the Kensington and Briarcliff TADs and noted that their value has decreased. Indeed the value has decreased and so the TAD has seen no accumulation of funds and so there have been no infrastructure improvements or redevelopment. The cost to the taxpayer has been zero. And all the while, every tax dollar has been paid because TADs do not eliminate taxes and money only accumulates in a TAD when the value goes up.
The old GM site represents a unique opportunity for DeKalb. Unfortunately, this property wasn’t liquidated when taxpayers footed the bill for General Motors to reorganize. We were left with a property that GM held without compromising on price. Now, we have the opportunity to redevelop this site to benefit all of DeKalb, increase the commercial tax base, provide jobs, and show that DeKalb wants to be a business friendly place. We have the opportunity to make sure the necessary infrastructure and school facilities get put in place. We have the opportunity to show that DeKalb is open for business. We can take the opportunity, mitigate risk to the public, and improve value for all the taxpayers. Let’s do this and show that DeKalb is united and a great place to do business.