What are TADs?
Tax allocation districts or TADs are designated areas where tax collections are frozen for 20 or 25 years from their date of creation and any increases in property tax value are used to repay bonds for infrastructure improvements in the given area. Once the TAD is complete, the local jurisdictions collect the new, hopefully much higher, tax revenue.
The TADs themselves are on the hook for repayment of the bonds, not local governments. TADs and other tax increment financing programs are popular ways to quickly finance expensive road, streetscape, park and transit projects.
The developer of the former General Motors plant site in Doraville said Thursday his firm will decide by June whether to continue with its ambitious vision of a mini-city along I-285 or scrap it.
Atlanta-based Integral Group, Doraville leaders and other supporters are ratcheting up pressure on the DeKalb County school board to take part in an infrastructure program, called a tax allocation district, to help fund critical road, sewer and park projects on the site.
Doraville and the DeKalb county commission have pledged expected future tax dollars to support public improvements through a TAD.
But the school board, which controls a majority of the tax pie, has thus far declined a request for a formal presentation by the developers and the city, according to project supporters. Superintendent Steve Green has said the district isn’t in the business of funding private projects, and a majority of the school board opposes the TAD.
The GM site, just northwest of the I-285/I-85 interchange, is prominent but also has challenges. Doraville’s development hasn’t kept pace with other major nodes along I-285 such as Dunwoody, Sandy Springs and Cumberland in Cobb County. The plant closure wiped out thousands of jobs and dented Doraville’s tax base.
The former GM property isn’t well connected to the rest of Doraville, the nearby interstates or to the neighboring MARTA rail station, necessitating costly infrastructure proposals.
Integral CEO Egbert Perry met with editors and reporters of The Atlanta Journal-Constitution Thursday to pitch his project, known as Assembly. He said it could bring thousands of jobs and jump-start lagging development in DeKalb.
“This is good not just for the city of Doraville … but the region,” he said. Perry said the school board is “misinformed” about the risks of participation.
In a statement Thursday, Green said: “The salient issue here is not the speculation around this real estate proposal, but whether or not it is good public policy for the DeKalb County School District to divert public education taxes away from the District’s primary purpose of providing the best possible education for children.
“Also, there are no guarantees on land speculations like this,” Green added. “It’s a ‘gamble,’ and the stakes are high.”
Since announcing plans in 2014, Perry has announced no committed office tenants, though a movie studio is set to open this year. Perry said uncertainty has caused three unnamed corporate prospects to walk. Time only increases the risk that a future economic downturn could disrupt what is likely a decade-long project, he said.
Sean Gillen, city manager for Doraville, said the schools will be better off with the TAD than without it, because the system will retain the $358,000 per year it now gets from the TAD area, while property taxes will grow from a “halo effect” of redevelopment in surrounding areas.
A study by Bleakly Advisory Group commissioned by the development team said the schools could see tax revenue grow $135 million from the development area during the life of the TAD, and see annual property taxes from the GM site grow to $17 million after the TAD is complete.
If the school system doesn’t take part, the project will have to be reduced to suburban-style development such as strip retail or auto dealerships, Perry said. That could actually reduce what the school system gets from the property as it stands today.
TADs are designated areas where tax collections are frozen and any increases in property tax value are used to repay bonds for infrastructure improvements. Once the TAD is complete, the local jurisdictions collect the new, and theoretically higher, tax revenue.
TADs have been used extensively in Atlanta, including for the Atlanta Beltline. A payment dispute between the city and its school system that arose would not happen in DeKalb, backers say, because of a different proposed structure.
Perry’s firm and partner Macauley+Schmit acquired the site from GM in 2014 for $50 million. The partners met with the city, county and schools and believed they had support from all for a TAD. The makeup of the DeKalb school board and senior system leadership changed since then, Perry said.
School board concerns
Board Chairman Melvin Johnson said the TAD issue hasn’t come before the full body because it doesn’t advance the board’s role as policymakers to ensure students receive a first-rate education.
Green has previously noted that the school system would effectively put up more than half the money but have only two of nine seats on an overseeing board. Doraville Mayor Donna Pittman wrote a letter recently offering the school district four seats and other concessions.
Johnson noted that the DeKalb school board has come under fire for past funding practices, mentioning the dismissal of six board members by Gov. Nathan Deal in 2013 for mismanagement that put the district more than $14 million in debt.
“Our accreditation was taken away from us because the board of education was spending funds that were not directed at it student achievement,” he said. “With that said, why should we go right back and do something that would cause our accrediting agency to question us again?”
Pittman, the Doraville mayor, said as a parent of DeKalb pupils, she respects the board’s concerns, but the board is effectively thwarting economic growth in Doraville by not acting. Pittman said she’s requested a chance to speak to the entire board, only to be told she could sign up for a 3-minute speaking slot during public comments.
“It’s disturbing to me that the school board could stop economic development in our city,” she said.