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Here’s why Gainesville plans to end its tax allocation program
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Construction crews work Monday, Dec. 6, 2021, at the site of the new downtown Gainesville development The National. When completed the site will be a Marriott Courtyard Hotel and have residential mixed-use property. The National was one of the biggest projects approved for TAD funds. - photo by Scott Rogers

Update, June 21: Gainesville City Council approved a resolution to sunset the Midtown tax allocation district. Applications will no longer be accepted after Dec. 31, 2023 and the city will stop issuing TAD reimbursements at the end of 2039.

After more than $250 million invested in downtown and midtown Gainesville over the past 16 years, the city is planning to sunset the area’s tax allocation district, which allows for property tax reimbursements to approved developments. 

The Midtown TAD has helped spur huge projects in the city, particularly over the last five years when developments such as Gainesville Renaissance on the downtown square, The National Marriott Hotel and the Bourbon Brothers restaurant and event center all started development and were approved for TAD funds. 

Twenty-five projects have been approved for TAD funds — including those Gainesville City Council will give a final vote to on Tuesday, June 21 — totaling about $40.6 million in approved reimbursements to developers and city projects. Though created in 2006, all but three projects were approved in the last five years. 

“The reason we’re getting these developments is because of the TAD,” Mayor Sam Couvillon said. “I can tell you we’re not going to get $40 (million) to $50 million investments in property on those places (otherwise).”

If the sunset resolution is approved, the city will not accept applications for TAD projects after  Dec. 31, 2023 and the city will stop issuing TAD reimbursements at the end of 2039. 

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Solis holds a grand opening and ribbon cutting event Tuesday, Feb. 15, 2022, at their newest apartment community in downtown Gainesville. - photo by Scott Rogers

By setting it 18 months out, the opportunity remains for another “premier project,” in the midtown area, Couvillon said.

The Midtown TAD was started in 2006 when the city saw a need to incite redevelopment of the downtown area. The pedestrian bridge across Jesse Jewell Parkway that now leads to Solis apartments wasn’t yet constructed, the fourth side of the downtown square was vacant and the Hall County Jail was an eyesore with high walls and razor wire near the Midtown Greenway. 

Soon, phase two of Solis apartments will start construction on the old jail site, building 184 units and about 5,000 square feet of retail space on the 4-acre lot.

The TAD allows developers and property owners to apply for reimbursements based on the improvements they make to property in the midtown area, about a ​​270-acre area bordered by Queen City Parkway, Moreno Street, E.E. Butler Parkway and Academy Street. 

Properties approved for TAD funding are taxed at the rate of the base year of the TAD, which is 2006. As the property is developed, its value increases, and the additional property tax revenue goes into the TAD fund for an agreed period of time, with some projects reimbursed over 15 years. 

Developers or property owners pay their full property tax bill each year and then may be reimbursed for TAD eligible expenses.

The catch is the additional property tax revenue gets added to the TAD fund rather than going other places, such as for parks or Gainesville City Schools.

“These things can’t go on forever and ever and ever,” Couvillon said. “Specifically we want to be respectful to our school system who would like to see us sunset that.”

Superintendent Jeremy Williams, who is on the TAD Advisory Committee, said school and city officials have discussed an end date of the Midtown TAD since 2018 when the city established the Westside TAD, which covers about 344 acres including Lakeshore Mall and parts of Atlanta Highway, Shallowford Road and Browns Bridge Road. 

“For us it was very important to have a sunset date,” Williams said. “No. 1 to know when those revenues continue, they will come back to the school system.” 

In other cities, some TADs never get sunset, he said, and Gainesville could be a model for other jurisdictions by setting a date, but the school district never requested a specific date. 

“By sunsetting one, we do not anticipate another one coming on board,” Williams said. “We’re optimistic that as this TAD gets sunset and we get a few more years on the Westside TAD to possibly look at a future sunset date there, that that’ll be the end of Gainesville city and TADs.”

The first project in the Westside TAD was approved by the TAD Advisory Committee last week, a “village-style” community with 161 townhomes and 70 single-family cottages. City officials have said they hope the project will have a “halo effect,” on the rest of the area. 

City council will vote on the sunset resolution Tuesday, as well as funding for four TAD projects: Carroll Daniel’s Steelworks facility, phase two of Solis apartments, Kelley’s Tavern and the Blue Ridge development.