Wednesday, October 22, 2008

The Election - Amendment II

"Shall the Constitution of Georgia be amended so as to authorize community redevelopment and authorize counties, municipalities, and local boards of education to use tax funds for redevelopment purposes and programs?"

This is a tough one.

Welcome to TAD land.

TADs are Tax Allocation Districts. The concept is local school districts allow funds raised through property tax, usually dedicated to education, to be used for infrastructure development. The theory is with these improvements overall property value will rise offsetting or even exceeding the original investment.

In Georgia, the Legislature passed law to allow TADs in 1985. Unfortunately, our good representatives on the hill were a little sloppy with the wording and when Atlanta's "Beltline TAD" was challenged in court last year, the Supremes gave it a 9-0 unconstitutional smackdown.

As the "Beltline" was not only the largest TAD ever proposed in the state of Georgia and theorized as the engine which could simultaneously make use of hundreds of acres of unused rail right of ways, spur development in needy areas and alleviate the city's choking transportation problem, the sudden stripping away of this common funding tool bordered on disastrous.

Amendment II is an effort to correct this constitutional mess.

Given the standards we set in the discussion of Amendment I, this may seem an easy call. TADS certainly seem to complicate the tax system.

The problem is TADs work.

The best example is Atlantic Station. At the time the largest reclamation of "brown space" in the nation, this TAD turned a toxic industrial site into a multi-use mixed development of bowling alleys, restaurants, condos and corporate offices. According to the Atlanta Business Chronicle, the increase in property value in just 8 years was an astonishing 7,213%. Money flowed not only back into the always strapped Fulton County School system, but dramatic increase in sales tax revenue helped every municipality involved.

There are many more success stories on a much smaller scale. TADs have been an overwhelming success for over 20 years primarily because local school boards have been good stewards of money spent for your children. Just last year, the Dekalb County School District opted to not fund the potentially disastrous Sembler/Druid Hills redevelopment project.

Ultimately, Amendment II is where the rubber meets the road between principle and realism. So, you're going to get a little wiggle room on this one.

If you believe a stand has to be made for simplification in the tax code and the Constitution, Vote NO.

If you believe this is not an addition to a cluttered Constitution but a minor correction to preserve something that is a proven success, VOTE YES.

Next: Amendment III

To view amendments in their entirety please go here.


Jen said...

What about the premise that this takes money away from education?

griftdrift said...

In this short term yes. But in the long term no. Before Atlantic Station was started Fulton County schools were getting 300k for that property. Now they are getting 300 million. That kind of cash have allowed them build new state of the art facilities inside the perimeter. Something inconceivable 10 years ago.

griftdrift said...

Correction. I should have said an increase of 300 million. Not an annual 300 million. That would be absurd.

buzzbrockway said...

I support TADs but I voted against this for the reason Jen stated. I want school funds to be used for schools. Let TADs move forward without school funds being involved and I'm all for it.

griftdrift said...

I think the argument there Buzz is the school tax pool is the only one of any size at the local level which makes these investments possible. But I'd love to here some arguments to the contrary.

It seems to be one of those cases where local governments with limited resources have to get creative with limited resources. Kind of like Amendment III. Just wait until I put that one up tomorrow. That should have some heads spinning.

buzzbrockway said...

Sure when politicians see a big pile of money their mouths water, but most schools are strapped for cash as well. There's got to be a better way.

Am I correct that the Beltway TAD was thrown out because it used school funds?

buzzbrockway said...

I should add that I don't know that I have a better way. You make a good argument for the amendment as written. I just think we got to stop letting the government rob Peter to pay Paul.

griftdrift said...

Yeah. The Constitution is pretty clear about how education funds can be used. It just sat there because no one ever bothered to file a case.

Anonymous said...

The argument that TADs take money from schools is actually flawed in its premise. Do TADs use money that would go to schools? Yes. The problem is that the revenue would not exist if it weren’t for the TAD itself. It is only the increase that gets funneled back into the project. The schools, county and/or city receive exactly the same tax revenue they did prior to the TAD. This is actually an improvement in most cases. As TADs are designed for declining properties, when the base is frozen it essentially stops the bleeding.