City is paying dearly for its big makeover

In 2003, Marietta undertook an ambitious plan to change its image. In 2007, this plan to make over the city's existing land-use mix started hitting speed bumps, and in 2009, it came to a halt.

The land-use legacy Marietta wants to change was produced by the World War II economy. It left Marietta with what some perceive as excessive amounts of public and rental housing.

Most residents of Marietta don't understand the magnitude of this redevelopment and its potential liability for the taxpayer.

The city is struggling with a budget shortfall, and the debt resulting from a stalled redevelopment program can aggravate its financial situation.

The makeover also reduces revenues going to the Marietta City Schools at a time when it is coping with a $4 million shortfall. To date, the redevelopment program has diverted some $500,000 from school-tax revenues.

In 2003, the City Council established a non-profit public organization called the Marietta Redevelopment Corp. to replace public housing complexes, World War II-era duplexes, and other miscellaneous properties with modern residential units and commercial space.

The MRC's primary tool is the Tax Allocation District. A TAD allows local governments to issue bonds to help pay for associated costs necessary to encourage redevelopment by private corporations.

By the end of fiscal year 2007, the Center City South Renaissance, Center City Perimeter and Franklin-Gateway TADs were certified by the state. They contain a total of 1,054 acres, or approximately 15 to 20 percent of Marietta's taxable land area.

Certification allowed Marietta to freeze personal and real property revenues earmarked for the school system and the city and county's general fund at their pre-TAD level, and divert all future tax increases to repay TAD development bonds.

The Center City South Renaissance is the only TAD that has moved into the bonding phase, obtaining an $8.4 million bond in 2005. Disbursements were made to private developers for neighborhood infrastructure improvements, and to reimburse the city for previous land acquisition purchases.

By the end of fiscal year 2007, the MRC had spent approximately $6.5 million of the $8.4 million bond. After deducting escrow and bond reserve fund requirements, this money is essentially spent.

Annual bond payments began in December 2008 in the amount of $851,153.

In 2006, the city granted the MRC $2.1 million from the city's general fund to leverage a $6 million line of credit. The MRC uses line of credit like a credit card to assemble property for resale to developers and pay incidental expenses.

According to city officials, the MRC currently has approximately $1.3 million of credit remaining and $1.2 million in cash.

Essentially, the only revenue source now available to the MRC is rent from 45 housing units it has assembled for a potential private developer, amounting to $9,410 a month. Costs for maintaining and managing this property are deducted from this revenue stream.

In an ironic twist, the city of Marietta has cited two of the MRC's rental properties with "having overgrown grass, weeds, obnoxious vegetation along with trash and debris." The city has also applied to obtain tax-exempt status for all the MRC's rental property, including the two cited as a health hazard.

If granted by the Cobb County Board of Tax Assessors, the tax revenues for the county and school system will decrease some more.