School districts participating in tax allocation districts are putting money into classrooms and investing in children. TADs are one of the most effective tools available to leverage private sector investment in a community for the long-term benefit of schools and kids.
A TAD offers local government entities the chance to issue municipal bonds. Investors in those bonds provide capital that is invested in infrastructure that wouldn’t otherwise get built. That infrastructure, in turn, attracts a level of investment by developers that wouldn’t otherwise be realized. The tax revenue collected from that new development is used first to repay the investors in those bonds. Once the bonds are paid, the new, much higher level of tax revenue that results from the developer’s investment is collected by the school district, city and county to fund education.
So school districts maintain current tax revenue for schools and leverage their ability to collect exponentially greater revenue to put into classrooms in the future. Not only is no revenue lost today and far greater revenue realized tomorrow, but the standard of living is raised along the way – and families are attracted to live in the school district.
The Atlanta BeltLine TAD, for example, is allowing the City of Atlanta, Atlanta Public Schools and Fulton County to invest in parks, trails and transit without raising or diverting taxes. It uses increased tax revenues from rising property values around the Atlanta BeltLine to pay for the infrastructure. As a result, Atlantans are enjoying new parks, trails – and anticipating transit. Developers are investing, producing new tax revenue for the city, schools and county. And – perhaps most importantly – families who were once leaving the city are staying, and new families are being drawn to an increasingly livable Atlanta.
Atlantic Station first demonstrated the impact of a TAD on the city, region and schools on a large scale. According to Invest Atlanta, the value of former Atlantic Steel property in Midtown was assessed at $7 million in 1999. TAD bonds helped pay for the almost $270 million in cleanup and infrastructure to maximize the value of the site for Atlanta and the region. For tax year 2015, the certified assessed value of the site is $537,895,460, generating an incremental increase in taxable assessed value of $530,772,220 from 1999 to 2016– resulting in an exponentially higher tax base for the taxing authorities.
Tax revenue realized by a school district as a result of private development attracted by a TAD is new revenue to fund education. An important, fair question any taxing authority reasonably asks when considering whether to participate in a TAD is whether the development would happen without it. The Council for Quality Growth suggests that it is important for a school district to further ask: What level of development would occur without a TAD?
If the answer is that the lowest (or at least lower) common denominator development will occur when parcels of a potentially large, master-planned development are sold off, then a school district should think twice. Opportunities to make transformative change typically need infrastructure requiring public investment. Even when the market demands something much greater — think Atlantic Station and the Atlanta BeltLine — the capital required to lay the foundation for such transformation is typically greater than what the private sector can invest alone. Building streets, bridges, tunnels and more that don’t exist today go beyond what anyone might reasonably expect of a developer; it is what we typically build with public investment.
Opportunities for transformative change in a community come along once in a generation. Protecting revenue today is important, but risking future economic stagnation potentially jeopardizes not only economic dynamism but educational opportunity for a generation.
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