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Tax allocation district amendment likely will sail to approval

Measure allows access to school taxes, but Hall holds on tight

POSTED: March 25, 2009 11:04 p.m.

School tax money may be available for redevelopment projects in Gainesville, Flowery Branch and Oakwood this year if a constitutional amendment passes through the state Senate as easily as it did the House.

It may be available, but that does not mean that Hall County school officials will be willing to forgo the revenue.

Legislators are working on an amendment to the state constitution that would allow school tax money to be used to finance infrastructure improvements and foster redevelopment in designated areas.

The amendment would revitalize the major financial component of tax allocation districts. TADs are defined areas in which property tax revenues received over a base property value would go toward improving infrastructure such as water, sewer and roads in the area.

Earlier this month, the amendment breezed through the state House by a 139-0 vote. It now awaits Senate approval. Ken Bleakly, who advises local municipalities on tax allocation districts, expects the amendment to come to a vote next week.

“We have a good feeling,” said Bleakly, president of Bleakly Advisory Group. “Things seem to be moving in the right direction.”

For years, local governments across the state have been using tax allocation districts to fund redevelopment. TADs lost power last February, however, when the state Supreme Court ruled that using school tax money — the main funding source for tax allocation districts — for noneducational purposes was unconstitutional.

The ruling came after a lawyer took Atlanta officials to court for using school funds on Atlanta’s BeltLine project. Officials had used the same kind of financing to construct Atlantic Station.

In the November general election, Georgia voters approved of an amendment to the state constitution allowing school taxes to be used for redevelopment. Legislators have, thus far, been willing to follow up on the voters decision, said Bleakly, who lobbied representatives on the amendment.

“We had a very, very favorable reading in the House,” he said.

If the amendment passes, Gainesville officials, who have a signed agreement with the Gainesville school system, will have the go-ahead to collect school tax money in 2009 to fund redevelopment in its 270-acre tax allocation district.

A developer has already expressed interest in using TAD financing, said Planning Director Rusty Ligon. City officials are waiting to receive an application from Gainesville City Center, LLC, which plans to build a high-rise hotel and office complex in Midtown and use some of the funds for infrastructure once school tax money is available.

Even if the governor signs off on the constitutional amendment, the Hall County school system may not be ready to contribute its tax revenue to redevelopment in Oakwood and Flowery Branch.

Neither of the cities has entered into TAD agreements with the Hall County school system, and the system’s superintendent said it is not likely that they will until the economy turns around. The school system faced huge losses in revenues this year and is not willing to agree to forgo any other revenues, said Superintendent Will Schofield.

Though the theory of tax allocation districts is that the redevelopment would boost property tax revenues in the long run, Schofield said that with development at a near stand-still, now is not the time to take a chance.

“I can envision an economic environment when TADs would make some sense,” Schofield said. “I don’t think we’re in one right now.”

Flowery Branch officials have moved forward with their TAD without the promise of school tax money. The city’s tax allocation district advisory committee recommended Wednesday that the Flowery Branch City Council commit up to $135,000 in financing for demolition work already done in the city’s 567-acre redevelopment district.

The money would go toward development in “Old Town” Flowery Branch, but the city will have to wait for school funding to help with bigger redevelopment projects in its district.

“When we’re scraping just to balance budgets, I doubt this board of education would be in a position to consider any TADs,” Schofield said.



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