DeKalb backs development of GM factory site, awaits schools’ support

How tax allocation districts work

A tax allocation district, or TAD, is a financing mechanism by which local governments can support development projects.

With a TAD, governments agree to freeze the amount of property tax revenue they each receive from the area.

Any additional tax revenue generated by rising property values is used to fund the redevelopment project.

In the case of the Assembly project in Doraville, up to about $247 million in bonds would pay for infrastructure improvements to make the site ready for businesses to locate there. Then the increase in tax revenue derived from the development would be used to pay off the bonds.

The TAD would expire after 25 years, and then participating governments would receive the entire tax base created by the development.

Ambitious plans to rejuvenate a closed-down General Motors factory site cleared a major hurdle Tuesday when the DeKalb County Commission unanimously agreed to invest in the redevelopment effort.

But significant challenges remain before the 165-acre site, located along the Perimeter near I-85, can be transformed into a vibrant mixed-use area with retail shops, office space, housing and parks.

Whether the development moves forward depends on the DeKalb school system's backing. The financing for the project would use expected increases in property tax revenue to pay for $247 million in infrastructure improvements, but the school system hasn't signed on.

DeKalb Superintendent Stephen Green said Tuesday he has “serious reservations” about devoting education resources to the Doraville project, known as Assembly.

“Our core business is teaching and learning, and routing revenue away from the classroom … is not in the best interest of the children,” Green said. “We are coming into financial stability, and we’re not necessarily willing to take that risk.”

Green said he’s reluctant to commit public money to speculative development, and similar previous efforts in DeKalb haven’t been successful. He also pointed out that Atlanta Public Schools has struggled with its Beltline development partnership with the city of Atlanta, which has missed payments to the city school system.

Developers have discussed the potential to relieve student overcrowding by building a school on the site, a proposal that didn’t satisfy Green because he said the school system can’t wait years for new construction. He is considering redistricting proposals that would address overcrowding.

School board Chairman Melvin Johnson also has said the area needs more immediate relief, and he won’t make a quick decision.

Supporters of the Assembly development said they'll work to persuade school board members of the project's benefit to students and their families. Part of the agreement approved by the DeKalb Commission requires construction of affordable housing units.

"We're very excited, and now it's time to get to work, and of course, we have to be working with the school board," said Doraville Mayor Donna Pittman after the DeKalb Commission's vote. "It's a game-changer for the whole city, the whole county, the whole region."

City Manager Shawn Gillen said he hopes school officials will come to realize the value of the project.

“We can focus our efforts on the school board, talking with them and trying to get them to a comfort level much in the same way as we did the county,” Gillen said. “We’ve got a lot of work to do yet, but this is a major step forward.”

The DeKalb Commission voted 7-0 to enter into an agreement with the city of Doraville to create a mechanism for public financing known as a tax allocation district, which will fund infrastructure on the site necessary to attract businesses. Those upgrades include a tunnel to the Doraville MARTA station and a street grid.

The site preparations would be funded through $247 million in bonds, paid off over time through taxes collected as property values rise. The DeKalb school district would have to provide more than half of that funding. No existing tax money would be used.

An opponent of the development, former Doraville councilman Tom Hart, told commissioners during their public comment period Tuesday that they should vote it down.

“This is purely a publicly funded project,” Hart said. “We’ll call it a pork project because that’s exactly what it is.”

The county wrote several protections into its agreement before the vote.

The county government won’t support the project financially unless the county school board also gives its consent, according to the agreement. And the county’s inclusion will automatically end in 10 years unless the commission takes another vote to continue its involvement.

“This development will not occur without the dedication of future tax revenues to improve that site,” said Commissioner Jeff Rader.

Integral Group bought the site from General Motors for $50 million last year after it had been unoccupied since the plant closed in 2008. Erik Pinckney, an executive for Integral, has said public support is "critical" to create a district where businesses want to locate.