Update: Two midtown Gainesville developments will be getting a boost from a city tax incentive program.
Wimberly Funeral Home on Summit Street will be expanding, and 14 new homes will be coming to the intersection of High and Grove streets. The two properties have joined the Midtown Tax Allocation District, a program that allows property owners and developers to use extra dollars from higher property tax rates toward developing the property itself.
Liberty Midland, the residential development, will be developed by a division of The Norton Agency. Developers asked for $403,000 in TAD funding, and the city awarded about $373,000. TAD payments will be spread out over three years, and developers will receive 40% of the payment once the certificate of occupancy is issued for the first six units. Then, 30% would be paid when the certificate of occupancy is issued for the other eight units, and the final 30% would be paid out in the third year.
Wimberly Funeral Home will be expanding onto an adjacent property the business has already purchased, with plans to build a new chapel, more gathering space and some parking. The business requested $150,000 in TAD funding, but it has not historically generated enough tax revenue to fulfill that request. The city has offered about $19,000 in funding, which was approved Tuesday.
Properties that are approved for funding are taxed at the rate established in the TAD’s base year, which is 2006 for the city’s midtown TAD. When a property is developed, its value will go up, and what would be an increased amount paid in property taxes instead goes into the TAD fund for the agreed time. Developers or property owners can use dollars from the TAD fund to pay for improvements to the property.
The funding was unanimously approved as part of the Council’s consent agenda.
Three projects in Gainesville could be boosted by a tax incentive program that provides government funding to help property owners and developers build or expand.
Gainesville Renaissance developers are requesting about $3.35 million in tax allocation district funding for the fourth side of the square mixed-use project.
The Norton Agency requested $403,000 in TAD funding for a development of 14 cottages in midtown Gainesville.
And a funeral home in midtown requested $150,000 for expansion plans.
Each request goes first before a TAD committee and then to the City Council for final votes. The latter two have been approved at lesser amounts by the TAD committee and await Dec. 17 Council votes.
What is a TAD and how does it work?
Governments can create tax allocation districts in which money is made available by the governing agency to help developers make improvements, which in turn ostensibly increases taxable values of the properties. TADs are often created in blighted areas to spur redevelopment.
Participating properties are taxed at the rate established in the TAD’s base year, 2006 for Gainesville’s midtown TAD, and as the value of that property increases, what would normally be an increased amount paid in property taxes instead goes into the TAD fund for an agreed upon period of time; this amount is often referred to as the increment.
Developers apply to participate and if approved receive payments annually, usually over a period of three to 15 years, depending on the size of the investment.
“So, the developer (or) owner pays their full property tax bill each year with this increment being deposited into the TAD fund, then the TAD eligible expenses are reimbursed to the developer (or) owner from the TAD fund,” Community and Economic Development Director Rusty Ligon said. “This process continues through the term of the agreement, again typically 3-15 years. Additionally, the taxing entities continue to receive their revenues that were established in the 2006 base year of the TAD.”
The investment is expected to be eventually recouped due to the expected increase in property value.
The request for this funding first goes to the TAD committee, which is made up of nine members representing government, school and business interests, and then to the City Council for a vote.
Tax Allocation District committee
The TAD committee hears requests first, then sends a recommendation to the Gainesville City Council for a final vote. The committee includes nine members, many of whom could designate someone else to serve in their place. These are the current members:
Jeff Stowe, Hall County commissioner who is designated to serve in place of the Hall County Board of Commissioners chair
Jock Connell, Hall County administrator
Danny Dunagan, Gainesville mayor
Bryan Lackey, Gainesville city manager
Jeremy Williams, Gainesville City Schools superintendent
John Filson, Gainesville City Schools Board of Education chair
Kathy Pethel, Gainesville City Schools director of finance who serves as a representative of the school system
Tim Evans, Greater Hall Chamber of Commerce vice president of economic development, who serves as a representative of the chamber. A representative of Main Street Gainesville, the city’s downtown development program, could also fill this post.
Rob Fowler, Turner, Wood & Smith CEO, who serves as a representative of the real estate or development industry
Gainesville’s midtown TAD includes a 270-acre area bordered by Queen City Parkway, Moreno Street, E.E. Butler Parkway and Academy Street. The area includes the Gainesville square. The TAD fund currently has $644,392.
One recent midtown TAD project is Carroll Daniel Construction’s new headquarters downtown, which was approved for about $500,000 in funding.
Gainesville also has a TAD for its west side, a 344-acre district that includes Lakeshore Mall, then stretches along Shallowford Road and includes several parcels on Browns Bridge Road, Atlanta Highway and Pearl Nix Parkway. That TAD was started in 2018 and doesn’t have any participants yet, so its fund balance is $0.
Gainesville is not the only city to offer this program. Georgia approved a state law allowing for tax allocation districts in 1985. And in downtown Flowery Branch, $5 million in TAD funding has been approved for a multi-use development at the former site of City Hall and the police department.
‘Fourth side of the square’
Gainesville Renaissance, the multi-use development slated for the Spring Street side of the downtown square, could receive the largest TAD request the city of Gainesville has seen. Developers are asking for about $3.35 million in funding.
The $22.4 million development will have 15,000 square feet of retail and restaurant space on the ground floor, 15,000 square feet of office space on the second floor and eight condominiums on the third floor. Groundbreaking will likely be in spring 2020, and the project should be done around August 2021.
City staff is recommending the request be fulfilled. The city would pay the increment that is generated by the project for a period of 15 years or until the money is reimbursed, whichever comes first.
The committee decided not to vote on the request at its Tuesday meeting, opting to take more time to consider it.
The project is a collaboration between developer Fred Roddy, Doug Ivester and The Melvin Douglas and Victoria Kay Ivester Foundation. Ivester is from New Holland and is a former Coca-Cola chairman.
A previous development planned for the property, Parkside, fell through in June. The developer of that project was counting on $2.5 million in TAD funding to offset the approximately $20 million in expected construction costs.
Residential development in midtown
The Norton Agency has plans to develop 14 cottages in midtown Gainesville at the corner of High and Grove streets, and developers are asking for a boost from the TAD program.
Frank Norton Jr., CEO of the Norton Agency, said the $2.35 million project is aimed at young professionals, and the two-bedroom, 2.5-bathroom homes will have rents of about $1,400 a month.
The homes will be about 1,200 square feet and designed for people living with roommates.
“We have designed a unit that has two equal-sized bedrooms, two equal-sized closets, two equal-sized bathrooms, two equal-sized showers so there’s no argument about who pays what rent,” Norton said.
The development will have a “21st-century farmhouse character,” Norton said. The neighborhood will be called Liberty Midland and is modeled after Liberty Forrest, a four-home community on Forrest Avenue in the city.
Norton requested about $403,000 in TAD funding for Liberty Midland, and the city is offering about $373,000. The TAD committee is recommending approval of the agreement, and the Council will get the final vote Dec. 17.
“It’s a good product. It’s going to be a good addition,” Mayor Danny Dunagan said.
TAD payments would be spread out over three years, and Norton would receive 40% of the payment once the certificate of occupancy is issued for the first six units. Then, 30% would be paid when the certificate of occupancy is issued for the other eight units, and the final 30% would be paid out in the third year.
Norton said construction will likely start in February or March of 2020, and the development would have six homes to start. All the units would likely be finished in 2021.
Midtown funeral home plans to expand
Wimberly Funeral Home on Summit Street plans to expand to an adjacent property the business recently acquired, building a new chapel and adding parking.
The property next door was rezoned from residential to general business earlier this year. Felicia Wimberly, funeral director and co-owner, said the existing business space will be renovated and a new chapel, which will seat 169 people, will be built on the adjacent property. New parking will be added to accommodate the space. The existing chapel will become two reposing rooms for families, Wimberly said.
The expansion will add about 3,200 square feet to the business, and the new space and the existing space will be connected, she said.
“Everything will be one fluid building. It will not look like it’s two different facilities that are put together,” Wimberly said.
Wimberly said the business is working on getting a building permit, and once the permit is issued, construction will take about eight months. The business will stay open during construction, she said.
The project will cost about $356,000, and the business applied for $150,000 in TAD funding, but Ligon said the business has not historically generated enough tax revenue to fulfill that request. The city has offered about $19,000 in funding that would be paid in a lump sum.
The committee approved that request, and now the Council will have the final vote Dec. 17.