Category Archives: Tax Allocation District

FactChecker Reviews Chairman Johnson on the TAD

WABE 90.1 took a Closer Look with Dr. Melvin Johnson (interview transcribed), chair of the DeKalb Board of Education, to discuss the Doraville TAD. The FactChecker staff is very concerned about Dr. Johnson’s understanding of the Doraville TAD and how TADs work among other numerous other inaccurate statements he made in that 15 minute interview.
Related Posts And Docs
  TAD Talk By Commissioner Nancy Jester – (May 2016)
  Transcribed Interview of Dr. Johnson on WABE – (May 2016)
  TAD – Q&A – Open Discussion – (Apr 2016)
  Doraville Tax Allocation District(Dec 2015)
  DeKalb Schools – Not a Fan of the TAD(Dec 2015)
.pdf link icon   Intergovernmental Agreement (IGA) with Doraville and DeKalb County
.pdf link icon  Doraville TAD Bleakly Report (outlines the rationale, boundaries, fiscal data and potential projects for the TAD)
Fact Checker

Rose Scott“Do you feel like the board has really vetted the opportunities, talked to all the major players involved here?”
Dr. Melvin Johnson“We met with Mr. Perry, the developer. We met with the Mayor and her staff of Doraville and many others discussing options and opportunities in this regard.”
The Superintendent and Dr. Johnson have had many conversations with representatives from the Assembly project.
The board, however, has never met with the developer or representatives from the City of Doraville despite many requests from the city to meet including this April 6 email and this May 4 email. There is also an ongoing petition asking the DeKalb County School Board to Hear the TAD Proposal.
Furthermore, the school district has asked the developer to not reach out to school board members individually.
Rose Scott“Are you saying that DeKalb Schools would essentially be forfeiting money that should come into the district over that time?”
Dr. Melvin Johnson“Yes. We would be deferring money in that regard over a million dollars per month in that regard.”
Rose Scott“A million dollars per month?”
Dr. Melvin Johnson“Yes. Per month that would be deferred. However, we get into how long that goes on and over a period of money we would be giving up roughly $235 million over time. It’s our estimate that we would probably break even in 2050.”
Rose Scott“Is that when you would get the money back?”
Dr. Melvin Johnson“That’s when we would start collecting the taxes from the development itself.”
This is the part that strains credulity. The school board chair is completely unaware of how the TAD works.
1) $936,000 is collected annually from the GM Site. It’s annually, not monthly.
2) With a TAD, the school district CONTINUES TO KEEP COLLECTING THAT MONEY (We can’t emphasize that enough).  As improvements are made and development occurs on the property, its value will increase.  The tax that is paid on that increase in the value, gets paid into the TAD account.
3)  The TAD is set for 25 years.  The school district would continue to collect the roughly $1 million in taxes every year.  The increase in taxes collected from the increased property value over that $1 million will start going to the school district in 25 years (2042), not 2050 as the chair suggested.
The school district will break even from this investment in 2050.  The school district will continue to collect in perpetuity 3 times the revenue  they would otherwise receive without the TAD.
4) If the school board doesn’t do the TAD, the Assembly Project will get abated from the Doraville Development Authority. It bears repeating, with NO TAD the school district GETS NO TAXES FOR 15+ YEARS.
Jim Burress – As you see the redevelopment question and how DeKalb County Schools play into that with the TAD. It sounds to me like you’re saying it’s a moot point, it doesn’t matter because it’s going to happen anyway.
Dr. Melvin Johnson – I think it will happen any way. It may not happen with the same profile that is being discussed right now. But, it will certainly happen and it will be developed regardless whether or not the school system participates or not.
That site will be developed with or without a TAD or an abatement. The question is, what kind of development will you get. Atlantic Station as it is could not have happened without a TAD, the Beltline could not have happened without a TAD. Without a TAD, the Assembly Project will not be the next Atlantic Station but a bunch of strip malls and apartments.

Nancy Jester wrote this colorful piece reflecting on Dr. Johnson’s interview.

DeKalb Commissioner Nancy Jester

Article:  TAD Talk  (May 6, 2016)
By: Nancy Jester, DeKalb County Commissioner

… Excerpt …
Early in the interview, Dr. Johnson said, “all funds generated by tax dollars should go to student learning.” He went on to say, “We are judged by how we manage our funds. We are judged by the product and student outcomes.” That sounds wonderful, right?
Sadly, DeKalb Schools does not even comply with state law requiring 65% of total operating expenditures be spent on “direct classroom expenditures”. And, our weak state Department of Education hands out waivers like candy. The state legislature should really do something about that. But, I digress.
For Chairman Johnson to say “all funds…should go to student learning” is duplicitous given the fact that such a low percentage of taxpayer dollars actually make it into the classroom. Furthermore, Dr. Johnson hasn’t exactly been a faithful advocate for improving the percentage of your taxes actually going into the classroom. Nope, he and the majority, kept right on spending your money on bloating the bureaucracy. The district also has some interesting procurement habits but I’ll save that for another blog. And while they were spending all your money for the benefit of adults and not “for the children”, they accumulated a mountain of cash. As of the end of February 2016, DeKalb Schools has over $225 million in operating reserve cash. For the same period the capital fund reserve is over $260 million. With money like that, why aren’t your classrooms at half the size? Why aren’t teachers getting bigger raises? Why are your kids in trailers anywhere? Why do you have to buy toilet paper to send to your kid’s school?
If they aren’t going to spend it on the classroom, they could always give us a tax cut. DeKalb is one of only a handful of districts that can even tax over 20 mils. Right now, we’re paying 23.73 mils. Do you think that extra 3.73 mils is helping? If it was, wouldn’t we see fewer schools on the OSD list rather than the net +3 that were added as targets for state takeover? DeKalb has more schools on that list than any other district.
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TAD – Q&A – Open Discussion

Stan Jester
DeKalb County
Board Of Education

The developers of the Doraville GM Plant site are calling the live, work and play community “Assembly”. They are seeking a Tax Allocation District (TAD) from the city, county and school district. The TAD was overwhelmingly approved by the city and county but came to a screeching halt with the school district.
Melvin Johnson, the school board chair, inquired into the desire of each board member to have a TAD presentation.  A majority of the board declined coming together to learn more about the TAD.
Recently, a petition was started asking the DeKalb County School Board to Hear the TAD Proposal.
From talking to AJC reporters, DeKalb citizens and listening to public comment, there are a number of questions that need to be answered about the TAD and the Assembly project. I write this blog to open the dialogue.
Luke Howe, the Economic Development Director for the City of Doraville, answers my questions about the TAD and the Assembly project.

Assembly Doraville TAD

Question: Why do you need a TAD? What kind of improvements can be paid for by the TAD?
Luke Howe (City of Doraville Economic Development Director): A TAD is needed to fund large scale critical infrastructure at the front end of the project. The items that can be paid for by a TAD include public owned infrastructure, including ~ 23,000 feet of roads, corresponding sidewalks, lighting and landscaping on both sides of the streets, and ~ 10,000 feet of sewer and water lines.
The most critical improvement is the covered street that connects the site to the Doraville MARTA Station, a Public Central Park, trail and a bike path that connects to the surrounding neighborhood. The covered street is expected to cost about $50,000,000 and is the item which will have the greatest impact in drawing large corporations who are demanding transit connections for their employees.
Question: The Kensington and Briarcliff TADs have decreased in tax digest value since their inception with Kensington showing a decrease in excess of 20 percent. If the same thing happened to the GM Plant site, how would that affect the Assembly TAD?
Answer From Luke Howe:  The Briarcliff, Kensington and Beltline TADs are not appropriate comparable sites to Assembly. Those are “Area TADs” that have neither specific projects driving the needs or a private partner who has made significant investment within the TAD boundary. If for some reason the Assembly TAD value decreases by “20 percent” the bond purchasers would be the only people affected. The taxpayers will have the public improvements funded by the bonds.
Question: The Beltline TAD spelled out how much money APS was going to receive. There were millions of dollars the city couldn’t pay APS. Why shouldn’t we expect the same thing from this TAD?
Answer From Luke Howe: The Beltline, the “build and they will come TAD,” is also an Area TAD. Additionally, it’s the first to use TAD bonds to take property off the tax rolls to build a trail with the expectation that the trail will spur collateral growth. Think about that. They eliminated their base increment when they bought private property for the trail. That, of course, created the need for a complex payment agreement to make up for the base loss. It was bold and ambitious, but it was inherently risky and speculative in nature.
Unlike those examples, the GM TAD is a Project TAD most similar to Atlantic Station. In these cases, a willing developer has secured the property and is driving the need. These are much less speculative because the development team has a plan. We know exactly what they plan to build and what their project will generate in terms of revenue. If the development scope or pace falls short, the amount of each specific bond issue will be correspondingly lower but, under no circumstances, will that result in any financial exposure to any of the public entities. The three public entities (i.e. the City, County and School Board) need to execute a well thought out agreement between them that reflects their negotiations.
Question: Are there any examples of any successful TADS in the metro Atlanta area?
Answer From Luke Howe: Many – Atlantic Station, Camp Creek, the Atlanta Westside and Eastside TADs have all spurred growth, increased the tax digest, and generated and/or increased sales tax revenue, personal property tax and other taxes.
Question: If the Assembly TAD doesn’t happen, will the Assembly project seek tax abatement from the Doraville Development Authority?
Answer From Luke Howe: If the Doraville TAD is not fully supported, The Assembly team will, in partnership with The City of Doraville and DeKalb County, pursue alternative financing for the public improvements.
Question: Atlantic Station received millions in grant money. How much grant money has the Assembly project received for redevelopment?
Answer From Luke Howe: If The City of Doraville/ DeKalb County/ MARTA are successful in attracting grant funding, it directly reduces how many TAD dollars are needed to fund public infrastructure. That would then allow the TAD funding to be paid off earlier and enable the public entities to receive the new tax revenues sooner. Like Atlantic Station, grants will be pursued by the City led coalition to reduce the local funding of the public infrastructure.
The City has several applications pending. But keep in mind grants have to be matched with local money in most cases. We’re applying for a $50 million USDOT TIGER Grant. The minimum 20% match is $10 million. We need $13 million to be competitive.
Question: It was determined that 59 GM sites were contaminated with hazardous waste. Why would this brownfield site be any different?
Answer From Luke Howe: GM did a good job of addressing hazardous conditions as they were identified. Despite their efforts, the old buildings (now demolished) contained some asbestos and lead that was remediated in advance of demolition.
Brownfield designation does not mean a site is contaminated but it does provide a mechanism for cleanup just in case something undetected is discovered during construction. The Brownfield Program provides a protocol for notification, addressing, and reporting.
Question: What studies have been done on the environmental condition of the site?
Answer From Luke Howe: Assembly has undergone extensive testing for environmental contamination including nearly two hundred exploratory borings. In addition to the testing, historical research was performed dating back to the beginning of the plant in the 1940’s. Both history and testing provided detail on the locations and makeup of soil that may need to be remediated.
Question: What is the current environmental condition of the site?
Answer From Luke Howe: Since the buildings that contained the majority of contaminants have been demolished and all of the building slabs and foundations remain in place, the former GM site is currently cleaner than it has been in over 50 years. If any additional contaminants are discovered, they will be cleaned in accordance with the Brownfield Program as regulated by the State of Georgia Environmental Protection Division (EPD)

So, it would seem that the question isn’t TAD or No TAD. The choice is between TAD or abatement. What are your thoughts?

Related Posts

AJC Marlon Walker

Superintendent: DeKalb Schools won’t be part of Doraville TAD
By Marlon A. Walker – The Atlanta Journal-Constitution
Jan 10, 2016 – Superintendent Steve Green said DeKalb County Schools would not contribute financially to what could be one of Atlanta’s most significant mixed-use developments since Atlantic Station, saying he would not gamble with millions in tax dollars meant to educate children.

Commissioner Nancy Jester

Doraville Tax Allocation District
By Commissioner Nancy Jester
Dec 22, 2015 – Every dime of property taxes for this property must be paid. The TAD does not change that. 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.

Superintendent Stephen Green

DeKalb Schools – Not a Fan of the TAD
By Superintendent Stephen Green
Dec 16, 2015 – I have several serious reservations about committing school resources over the course of the 25 years of the TAD for this project.

  1. Our core business is teaching and learning, not speculative, unpredictable real estate projects.
  2. Two of the three current TADs in DeKalb County have not succeeded in meeting their tax revenue projections. The Kensington and Briarcliff TADs have decreased in tax digest value since their inception with Kensington showing a decrease in excess of 20 percent.
  3. After several years, the ongoing inability of the City of Atlanta and the Atlanta Public Schools to fulfill their intergovernmental agreement based on a TAD for the financing of the Beltline project demonstrates how unforeseen pitfalls can be costly to the local school system.
  4. The school tax digest for the Doraville TAD would be fixed for 25 years with a best case scenario of nine more additional years before the School District would recoup taxes that had been given up.

Petition – Ask the DeKalb County School Board to Hear the TAD Proposal
  Bob Kelley (Apr 29, 2016) – I strongly believe that this is very important to our community and our county. From what I’ve read, the school board could certainly use the extra revenue. I respect Egbert Perry and his reputation and know that he will deliver a quality finished project!
  Shelby Triick (Apr 29, 2016) – This development is vital to our area and will be a catalyst for improvements throughout
  Katerina Taylor (Apr 23, 2016) – The future of DeKalb is on the line and if we don’t take action now, the citizens of this county will experience the adverse impact of our unwillingness to make the right decisions around infrastructure, economic development, and future development of people in the county
  Robert Hope (Apr 23, 2016) – There is no logical reason for the school board to refuse to allow anyone investing $66 million in our county to present his proposal to the board. Not doing so is simply rude and not the way to encourage anyone to want to do business in DeKalb.