Proposal to close downtown tax district meets with opposition

A special taxing district created to boost development in downtown Atlanta could soon be dissolved.

In his annual budget, Atlanta Mayor Kasim Reed has proposed retiring the Eastside tax allocation district, an area that stretches from Auburn Avenue to Five Points.

Property tax revenue collected from new development in that district is currently used to fund new projects. The Eastside tax allocation district, or TAD, has $64 million that can be used to build new projects, officials said.

If the city retires the district, after paying off its debt, $5 million would be left. Officials say they can use that money to help fund an anticipated infrastructure bond worth up to $250 million, pending voter approval.

But critics say retiring the district is premature and takes away a critical economic development tool in a part of town that is just now starting to blossom. The area has seen a boom in recent development, including the new Atlanta Streetcar, set to begin operation later this summer.

District 2 Councilman Kwanza Hall called the budget proposal “penny wise and pound foolish.”

Though the Eastside TAD was created in 2003, it hit several snags and didn’t get off the ground until just before the recession hit, which effectively halted construction.

“The Eastside TAD is almost in its infantile stages of development. … Now coming out of the recession we have an opportunity to attract people to come downtown,” said Steve Labovitz, a former city official and now partner at McKenna Long & Aldridge. “Once you give it up, you may never be able to get it back again.”

Reed officials, for their part, say they’re sensitive to the concerns of Eastside TAD supporters, which include downtown booster Central Atlanta Progress.

Still, the administration has not withdrawn the measure from Reed’s proposed annual budget, which is now being vetted by the Atlanta City Council. Doing so would leave city officials scrambling to fill a $5 million hole in the city’s proposed budget.

“The mayor has heard and understands the concerns of Central Atlanta Progress and others,” said Reed spokeswoman Melissa Mullinax. “At this point, changes to the budget happen through amendments from the council.”

The Eastside TAD funds already have been used to help build such mixed-use development projects as TWELVE Centennial Park, The Sweet Auburn Village and 30 Allen Plaza, an office building, according to Invest Atlanta, the city’s economic development agency that oversees Atlanta’s tax allocation districts.

Underground Atlanta, which the city announced plans to sell, is also located within its boundaries. A potential buyer could be eligible for assistance through the TAD funds.

Should Atlanta retire the TAD, just 11 years into its 25 year lifespan, it would have to pay off all project debts, including paying a portion owed to Fulton County and Atlanta Public Schools in property tax revenue, officials said.

The $5 million that remains would be returned to the general fund.

But Hall said it’s better used within the TAD. He believes the roughly $64 million can be leveraged to hundreds of millions more.

Several future projects depend on the TAD funds for completion, he said, with more poised to receive funds over the life of the TAD.