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Court ruling throws big wrench into Gainesville's plans for Midtown

POSTED: February 26, 2008 5:00 a.m.

Gainesville officials will have to take their plans to use school property taxes on the Midtown redevelopment back to the drawing board following a state Supreme Court ruling Monday.

Last year, Gainesville officials turned the Midtown area into a tax allocation district, allowing property taxes from improvements in Midtown to be used on the area’s development.

The plan included using monies from city, county and school property taxes, but City Manager Bryan Shuler advised the City Council that the Georgia Supreme Court decision ruled that it is unconstitutional for the city of Atlanta to use school property taxes on its Beltline project, because Georgia’s constitution does not allow school property taxes to be used for noneducational purposes.

The decision will keep Gainesville from funneling school property taxes into its redevelopment of Midtown, Shuler said at the City Council’s work session Thursday.

Shuler said the city still could use county and city property taxes to fund the redevelopment.

"But we all know where the bulk of the funding would come from," Shuler said.

Shuler said Gainesville officials will have to find other ways to fund redevelopment in Midtown. The only way to trump the Supreme Court’s ruling, Shuler said, is an amendment to the state constitution.

Councilwoman Ruth Bruner suggested that the council and the Georgia Municipal Association lobby for the constitutional amendment.

"I’m sure there will be a lot of people looking at how you cure this," Shuler said. "I think Georgia’s constitution leaves a lot to be desired when it recognizes today’s world versus maybe when some of these things were decided."

Already this week, state officials have started searching for a solution to the loss of school monies as funding for the districts.

Lt. Gov. Casey Cagle announced Thursday that the state Senate has formed an informal group to work on the issue that many cities in the state now face with their tax allocation districts.

"The recent decision by the Supreme Court of Georgia has threatened a critical infrastructure and economic development tool for Georgia, and we must act and develop a solution," Cagle said in a statement. "We look forward to working with the speaker’s designees to address this issue and bring a remedy to the floor swiftly."

Yet, Shuler acknowledged that a constitutional amendment was not going to be an easy feat.

"There are a lot of people that don’t like tax allocation districts, and some of them may not be interested in changing (the state constitution)," he said. "I’m not saying that people are wrong, all I’m saying is that it obviously has a major impact on every city that has been using or considering using a tax allocation district now."

Shuler said these cities would now have to consider what alternative funding options were available for the proposed community improvements.



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