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How the city is using tax allocation program to encourage development
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Construction workers work on the Main Street parking deck on Monday, Sept. 24, 2018. This project has been funded by Gainesville's Midtown Tax Allocation District. - photo by Scott Rogers

The face of downtown and midtown Gainesville is changing. The downtown square will soon have a residential development, Carroll Daniel Construction’s new four-story headquarters will also house restaurants and retail, and two additional levels on the Main Street parking deck will provide spots for visitors.

The city of Gainesville has helped facilitate those changes through its midtown tax allocation district, which uses property tax payments to support construction of new developments.

When a property is developed, property taxes on that land will go up, so the city would collect more revenue from the property owner. Developers who participate in TAD programs can use that tax increase to their advantage. The extra dollars from the increase go into a fund that can be used to pay for improvements.

“You take an area that has declining tax revenues, an area that’s struggling a bit and needs a shot in the arm, so to speak, some kind of assistance to encourage people to reinvest in that area, so back in the 2000s, downtown and midtown Gainesville qualified,” City Manager Bryan Lackey said.

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Construction workers work on the Main Street parking deck on Thursday, Nov. 1, 2018. This project has been funded by Gainesville's Midtown Tax Allocation District. - photo by Austin Steele

Gainesville adopted its midtown TAD in 2006. The city defines midtown as an approximately 270-acre area bordered by Queen City Parkway, Moreno Street, E.E. Butler Parkway and Academy Street. The TAD also includes the Gainesville square.

Georgia adopted its tax allocation district law in 1985 but did not issue its first TAD bonds until 2001, according to a Georgia State University report. Most states use similar programs, although the practice is often called tax increment financing.

Developers have to apply with the city to participate in the TAD program. Their projects are reviewed by a TAD committee, which sends a recommendation to the Gainesville City Council. The City Council has the final vote on whether a development will receive TAD funding.

Gainesville’s TAD committee has two Hall County commissioners, as well as Lackey and Gainesville Mayor Danny Dunagan. Gainesville City Schools sends two representatives, and the Greater Hall Chamber of Commerce is represented by a staff member. Two community members complete the nine-person board.

Although the midtown TAD was established in 2006, Lackey said that for about a decade, only a few small projects signed on to the program. But now that the economy is improving, larger developments are receiving funding, which is the goal of the program.

“The true intent of a TAD is to have a big project, so we incentivize redevelopment, like we’ve done on the Carroll Daniel project and like we’ve done on the Parkside project,” Lackey said.

In February, the City Council approved about $500,000 in TAD financing for Carroll Daniel Construction’s $12 million new headquarters at Jesse Jewell Parkway and Main Street. The four-story building, which is expected to be ready in June, will have retail and restaurants on the first floor.

The TAD has also been used to fund an upcoming multi-use development on the “fourth side of the square,” which is currently a parking lot. Parkside on the Square will have 32 luxury condominiums, bringing residences to the square, as well as 15,000 square feet on the first floor for retail and restaurants. That approximately $21 million project received about $2.5 million in TAD funding, which will take about a decade to recoup.

The Parkside project has not broken ground yet, as developer Tim Knight is waiting to sell two more condominiums before starting construction.

The city itself has also participated in the TAD program for the expansion of the Main Street parking deck, which is set to reopen later this month and will have 180 new spaces when additions are done. Expansions are funded by $1.5 million in TAD funding that will be used to pay a $4.695-million bond with Regions Bank approved by the City Council in July.

Gainesville also has a tax allocation district for the Lakeshore Mall that has not been used since the mall changed ownership last year.