Gainesville officials are gearing up to dole out funds in the city’s tax allocation district, and developers of a high-rise hotel and office complex may be the first to use them.

To make any sort of financing possible, though, the city first has to establish some ground rules.

At today’s meeting, City Council will vote on procedures to allot funds to encourage the redevelopment of the Midtown tax allocation district.

The funds, garnered from taxes on increased property values, can be used to pay off loans for infrastructure improvements in a designated area or tax allocation district — in Gainesville’s case, Midtown and downtown.

The procedure for TAD funds would be similar to the city’s zoning process: City staff reviews requests, an advisory committee makes a recommendation and the City Council makes the final decision. But unlike zoning, the process for TAD funds would not allow the City Council to override a negative recommendation from the
advisory committee.

The city already has a potential applicant for funds, and setting up a procedure has become imperative, Gainesville’s Planning Director Rusty Ligon said.

"Before we can really address that request for TAD funding we’ve got to officially set up our policies, procedures, our application form and also, very importantly, our advisory committee," Ligon told the council Thursday.

In mid-January, Gainesville City Center LLC asked that its hotel and office project be considered for TAD financing, he said.

"They are very interested in obtaining TAD funds to help create a financially viable development," Ligon said.

Gainesville’s tax allocation district comprises 270 acres bordered by the Norfolk Southern railway, Queen City Parkway, West Academy Street and E.E. Butler Parkway.

Under the original district agreement, officials from the city school board and city and county governments set aside tax revenues collected above a base property value of $85 million. As property values in the district rose above $85 million, the three governments set aside the extra revenues to repay loans used for infrastructure improvements. Once those loans are repaid, the three governments could reap the full benefit of increased tax collections from higher property values.

The city is establishing its procedure on TAD funds while waiting for a constitutional amendment allowing the use of school funds for redevelopment. During the current session, legislators are expected to amend the state constitution to allow that use, as approved by Georgia voters in November 2008. In February 2008, the state Supreme Court ruled it was unconstitutional to use school funds for that purpose.

The city school system’s contribution will add significantly to the city’s redevelopment fund. School taxes were about 70 percent of Gainesville residents’ property tax bills in 2008, Ligon said.

The district’s redevelopment fund garnered $72,872 by June 30 without school funds, he said. School taxes would have added another $290,000.