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Tax allocation districts post impressive results, accelerate growth in overlooked areas

New study provides first look at finances, growth rates for tax districts

ATLANTA ? Oct. 4, 2007 - Despite a relatively short track record, tax allocation districts ? an increasingly popular tool for encouraging redevelopment ? are already achieving impressive and sometimes spectacular results, a study released today shows.

The study, Survey and Analysis of Tax Allocation Districts (TADs) in Georgia: A Look at the First Eight Years, shows property values inside TADs climbing by an average of more than 14 percent per year compounded. In at least seven cases, compounded annual growth rates easily exceeded 14 percent, ranging as high as seven times that amount in areas that have been redeveloped.

?TADs are working. They?re promoting redevelopment in areas that were underutilized, and they?re doing it in a way that lets new development ? not the average taxpayer ? pay for the public projects needed to make that development happen,? said Jim Durrett, executive director of the Livable Communities Coalition, the nonprofit land use advocacy group that commissioned the study.

The study provides a first look at the financial performance of TADs. It was conducted by Bleakly Advisory Group, an Atlanta-based firm specializing in market and financial analysis, public finance and the implementation of pubic-private partnerships. Oversight was provided by Dr. David Sjoquist, professor of economics and holder of the Dan E. Sweat Chair in Educational and Community Policy in the Andrew Young School of Policy Studies at Georgia State University.

Study author Ken Bleakly said, ?We believe the early track record shows TADs are the most effective redevelopment tool available to local officials in Georgia and have only just begun to achieve their potential positive impact on the health of Georgia?s cities and towns.?

TADs have soared in popularity in recent years because they promise a relatively painless way to pay for public projects needed to lure or enhance private investment, especially in areas that might otherwise not attract such development. Bonds are typically issued to pay for the projects. The bonds are then repaid with property taxes generated by rising real estate values associated with the new development. As soon as the bonds are paid, the new tax revenues revert to cities, counties, and schools.

Examples of TADs in Atlanta include:

  • Northwest TAD-Perry/Bolton, an area which has recently seen a 21.2 percent compounded annual growth rate in property valuation. Total appreciation there has been 199.7 percent. The annual appreciation rate there before the district was created is estimated at 10.8 percent.
  • Atlantic Station (launched as the Atlantic Steel TAD): 65.4 percent. Total appreciation there has been 7,213.5 percent. The estimated rate before creation of the district: 6.9 percent.
  • Princeton Lakes: 152.9 percent. Total appreciation has been 10,246.5 percent. The estimated rate before: 10.8 percent.

Examples of compounded annual growth rates in TADs outside Atlanta include Avondale Mall/Columbia Drive, 20 percent; Ellenwood (Clayton County), 29.5 percent; East Point/Camp Creek, 54.3 percent; and Lakeside, 108.9 percent.

Other lessons learned in the course of the study:

  • TADs are growing quickly. The first TAD was established in 1999. There are now 27, with 31 additional areas authorized to hold referendums to create new TADs.
  • Cities lead the way in establishing TADs. Of the 27 TADs in existence, 3 were initiated by counties, seven appear to have been initiated or proposed by developers, and cities sponsored the other 17.
  • Only four Georgia cities ? Acworth, Atlanta, East Point, and Marietta ? have issued TAD bonds, with Atlanta accounting for nearly 92 percent of the total value of TAD bonds issued so far in Georgia.
  • Creating a TAD isn?t sufficient for progress. Local governments must take action to find qualified projects and lay the groundwork for success.

Study authors also caution that TADs have seen success in the fast growing metro Atlanta region and during a time of favorable real estate market conditions. They note that market conditions are changing and that ?TADs remain largely untested in lower cost and slower growing areas of the state.?

Copies of the report are available on the Livable Communities Coalition Web site, livablecommunitiescoalition.org, or by calling the Coalition at , ext. 10.

Formed in 2005, the Livable Communities Coalition unites 40 organizations working to change the way metro Atlanta grows by focusing on land use, transportation, housing, and conservation of open green space and natural resources. Member organizations include area leaders in aging, building and development, business, urban and landscape design, government, housing, planning, sustainable development, the environment, and transit and transportation alternatives.

The Coalition assists local governments in planning for high-quality growth, leads public planning efforts, advocates public policies that promote quality growth, and educates and assists citizen groups.


Further Reading

Chris Leinberger: The Structural Shift in Building in Metropolitan Atlanta

Chris Leinberger Interviewed about Tyson's Corner, VA on NPR