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Gainesville's Midtown will go on, amendment or no
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With or without money from the school board, Midtown's redevelopment will still go on, Gainesville officials say.

The Gainesville City Center development that is already beginning with the demolition of Town View Plaza is proof.

However, that doesn't mean city officials do not have their fingers crossed that voters will approve a statewide referendum that would amend the state's constitution and allow school board money to be used for redevelopment projects or tax allocation districts.

Unlike many cities, Gainesville had no approved projects for its tax allocation district when the state Supreme Court ruled that using school money for noneducational purposes was unconstitutional and deemed the city's agreement with the city school board null and void.

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

Two years ago, Gainesville officials designated 270 acres bordered by the Norfolk Southern railway, Queen City Parkway, W. Academy Street and E.E. Butler Parkway as a tax allocation district with the intention to use the designation as a tool to foster redevelopment in the city's downtown and Midtown.

With the district's approval, city and county government and city school board officials would set aside property tax revenues they collected for property values above a base property value in the area. The extra money could be used to pay back loans the governments took out to help pay for infrastructure improvements in the area.

Local officials across the country are using tax allocation districts or tax increment financing to draw developers to blighted areas, said Ken Blakely of Blakely Advisory Group in Sandy Springs.

Blakely consulted with officials in many Georgia cities as they created their tax allocation district, including Gainesville, Oakwood and Flowery Branch. He said the district allows governments to nail down developers who may be interested in redeveloping blighted areas, but come up about five to 10 percent short of affording the infrastructure improvements needed for their developments.

The districts help bring in projects that would not have happened if the government did not "fill the gap in financing," he said, and help raise property values and property tax revenues for local governments.

"It doesn't make a bad project a good project. It helps a project that may be on the fence. It sort of pushes it over the edge," Gainesville's planning director Rusty Ligon said.

When the district in Gainesville was approved, the property value of the area totaled $85,008,478, Gainesville's Chief Financial Officer Melody Marlowe said.

Under the agreement, the city, county and city school board would continue to receive the property tax revenue from the $85 million worth of property in the district.

As property values in the district increased, the three governments would set aside the revenues to repay loans taken out for infrastructure improvements. Once those loans were repaid, the three governments could reap the full benefit of the increased property values.

"Taxes on that base amount will still go into the governments as it did two years ago, and only that increment tax goes into this district," Marlowe said.

Today, the district is worth nearly $104.8 million. Taxes collected this year were the first set aside for the district's redevelopment. The district's redevelopment fund garnered $72,000 from the property tax collections in the defined area. Of that money, $25,000 came from revenue from city property taxes, and the rest was from county collections, Marlowe said.

The city school system did not contribute to the fund, because before the city collected property taxes, the state Supreme Court ruled in February that using school property taxes for noneducational purposes is unconstitutional.

The school system's contribution would have by far been the largest, as city school board taxes were about 60 percent of Gainesville resident's property tax bills this year, Marlowe said.

Losing the school's contribution is a huge blow to the idea of the district, Blakely said.

"I see the interest in continuing it, but it's not going to have the same kind of impact (that it would have)," Blakely said. "It probably means that it's only going to work for the larger scale projects... it really probably is going to hurt the smaller cities."

If the statewide referendum to allow school property taxes to be used in tax allocation districts passes on Nov. 4, the city would have to enter into a new agreement with the city school board to use its money for the district, City Manager Bryan Shuler said.

And though the city will find other ways to accomplish its goals of redeveloping Midtown and downtown if the constitutional amendment never happens, it sure would be nice, Shuler said.

"We feel like in our redevelopment area, when we're sitting down at the table, we want to be able to offer it in our toolbox, so to speak, and see if (developer's) needs and our needs can be met," Shuler said.

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