When Catoosa County, Georgia, voters go to the polls this November, a local referendum on the ballot will ask them to decide whether the county and the cities of Ringgold and Fort Oglethorpe should have the authority to encourage private development in specific areas through the creation of tax allocation districts.
The districts are a development tool used by local governments to redevelop economically and socially depressed areas that are not reasonably anticipated to develop on their own, according to Catoosa County Economic Development Authority Director Keith Barclift.
The districts allow local governments to provide financial assistance to eligible public and private redevelopment efforts within the district.
Increases in property tax revenues, which are expected to come primarily from new investment, are set aside to pay certain infrastructure or private development costs within the district. Such future revenues are typically borrowed against using tax allocation district bonds.
Approval to establish a tax allocation district must come from all government entities with tax authority within the district — meaning the city, county and school district — in order to use all portions of property tax revenues, though it is possible for cities and counties to establish tax allocation districts independently of one another if permission is granted for a district to be established by one entity and not the other.
An example of how the districts have been used in the past is Atlantic Station in Atlanta, where the city used a tax allocation district to remove contaminated soil from the site of an old steel mill, clearing the way for a mixed-use development.
Other potential tax allocation district projects include the construction of new parks and recreation facilities, new sidewalks and trails, improvements to an area's basic water and sewer infrastructure systems and the preparation of sites for commercial or residential development through the construction of new or the rehabilitation of existing public facilities.
At a town hall meeting for voters Monday night, officials from both cities and the county said they are not yet sure where they would establish a tax allocation district if granted the power to do so.
The Lafayette Road Corridor was suggested as a potential location where redevelopment might be a benefit for future growth, but Barclift said the process to select the specific place where a tax allocation district could potentially be established could not even start until after voters have their say in November. At that point, he said a redevelopment plan would be created to outline specific goals for the district based on studies and analyses of the area.
James R. Woodward, a partner in Gray Pannell & Woodward LLP's Atlanta office, said at Monday's meeting that tax allocation districts may only be created in an area that is presently served by sewer and that is determined by current data from the U.S. Census Bureau to be urbanized.
Potential locations must also qualify as "blighted," "deteriorating," or an "area with inadequate infrastructure," such as old shopping malls or old manufacturing facilities.
Asked how terms like "distressed" would be defined and who would define them for the purpose of potentially establishing a tax allocation district, Woodward said that while local government officials will ultimately be the ones making those determinations, such words have specific legal definitions.
"By doing a tax allocation district, the government has to determine no private developer is likely to come and put money into the area to fix it up and bring in new development," Woodward said. "The area is then rehabbed to attract those private developers who might not want to pay a bunch of money to clean up land or take down buildings, or whatever the case may be."
Woodward also said property taxes would not increase due to the establishment of a tax allocation district. There is no increase to the millage rate required, he said, when a tax allocation district is formed.
Instead, the existing property tax collections are set as the base amount and continue to be remitted to the local government's general fund. As new development occurs, the increase in property tax collections is used to pay off the cost of either pay-as-you-go infrastructure improvements or bonds if the improvements were financed up front.
Some local residents at the meeting expressed concern about eminent domain, or the power of the government to take private property and convert it into public use, if a tax allocation district was established. They questioned what would happen to business owners or homeowners living within the area of a tax allocation district.
Woodward said no eminent domain powers would be established by creating a tax allocation district, though the government would retain existing powers of eminent domain.
"What I can tell you is that for a TAD to be successful, you really want as many properties within the district to be privately owned as possible," he said.
Contact Kelcey Caulder at firstname.lastname@example.org or 423-757-6327. Follow her on Twitter @kelceycaulder.