Where’s the Profit in Neighborhood Revitalization?

1. Where’s the Profit in NeighborhoodRevitalization? TOOLS FOR ECONOMIC DEVELOPMENT

2. Consultants to local governments and their economic development agencies • Managing development and redevelopment projects • Including adaptive reuse of downtown properties

3. Projects

4. Private Development Company • Partnering with local communities • To define and develop adaptive reuses for downtown historic properties

5. Projects

6. Revitalization as Economic Development • Public-private partnerships – its all about the risk. • Authorities- who needs them • Incentives – the elixir of economic development

7. Revitalization as Economic Development • The economies of development • Economy – the exchange of goods or services for a fee • Development – give the customer a way to come and a reason to come • The development of economies • Are you chasing the puck? • Investing in the future

8. All economic development is local • Quality of life • Homes • Schools • Shopping • Entertainment • Recreation

9. Public-private partnerships – its all about the risk • Private sector risk analysis • The greater the reward the greater the risk • The greatest reward for the least amount of risk • Public sector risk analysis • There is no reward worth the risk • Profit vs. Policy

10. Reconciling the two • Crisis vs. Opportunity • Political will

11. Authorities- who needs them • Communities in transition – change, it happens: • In spite of you • To you • Or because of you • Communities who have moved beyond the “Pogo Principle”(We have met the enemy and he is us.) • Clayton County • Vision

12. Incentives – the elixir of economic development • Don’t create development • No one chooses to open a business because they can borrow the money cheaply • No one chooses to hire 50 new people because they can get $3500 per job in state tax credits • Direct development – create a positive response to the following: • Is it a place I want to do business? • my chance of success increased?

13. Whose money is it anyway? • My money • Your money • Their money

14. Authorities • Urban Redevelopment • Incentives – lessen risk, increase revenues or decrease expenses TOOLS FOR ECONOMIC DEVELOPMENT

15. Authorities • Threads in a patchwork quilt –conduit by which the public and the private partner • Relationship • Autonomous entity • Partner • Compatible objectives(Mutually inclusive)

16. Types • Industrial Development Authorities (DA) • Downtown Development Authorities (DDA) • Urban Redevelopment Agencies • Redevelopment Authorities • Housing Authorities • Recreation Authorities

17. Urban Redevelopment • Urban redevelopment in rural communities • Why is this city here? • Are the reasons gone, or just changed? • Area within the boundaries set forth herein, there exists a predominance of buildings or improvements, both residential and nonresidential, which by reason of dilapidation, deterioration, age, vacancy or obsolescence are conducive to crime and are detrimental to the public health, safety, morals,or welfare. In addition there are areas which by reason of the presence of a substantial number of vacant, deteriorated, or deteriorating structures;

18. predominance of defective or inadequate street layout; faulty lot layout in relation to size, adequacy, accessibility, or usefulness for present or future development:; or having development impaired by transportation noiseor by other environmental hazards; or a combination of such factors substantially impairs or arrests the sound growth of the municipality, retards the provisions of adequate housing accommodations, and constitutes an economic or social liability and is a menace to the public health, safety, morals, or welfare in its present condition and use. The rehabilitation, conservation, or redevelopment, or a combination thereof, of such area or areas is necessary in the interest of the public health, safety, morals, or welfare of the residents of the municipality or county.

19. Plan • A feasible method exists for the relocation of families who will be displaced from the urban redevelopment area in decent, safe, and sanitary dwelling accommodations within their means and without undue hardship to such families; • The urban redevelopment plan conforms to the general plan of the City as a whole; and • The urban redevelopment plan will afford maximum opportunity, consistent with the sound needs of the City as a whole, for the rehabilitation or redevelopment of the urban redevelopment area by private enterprise. • Action - designate a redevelopment agency for the City for the purpose of implementing the Plan.

20. Incentives – lessen risk, increase revenues or decrease expenses • Increase yield • Density • Mixed use • Shared parking • Cost of doing business • Job tax credits • Back door tax abatement • Enterprise Zone

21. Cost of capital – cheap money • Tax exempt financing • Loan programs • DCA – Downtown Development Rev Loan Program • GA Cities Foundation Rev Loan Program • Local Loan Pool • Tax Credits • Historic tax credits • Low income housing tax credits • New Market tax credits

22. Public investment • Public facilities • Infrastructure

23. Community Improvements Districts • Authority • Article IX, Section VII of the Georgia Constitution • Purpose • To provide and fund governmental services and/or facilities not otherwise available to densely developed geographic area.

24. Governmental Services/Facilities • Street and road construction and maintenance • Parks and recreational areas and facilities • Storm water and sewage collection and disposal systems • Water storage, treatment, purification, and distribution • Public transportation • Terminal and dock facilities and parking facilities • Such other services and facilities as may be provided for by general law. But only if such services and/or facilities are specially required by “the degree of density of development within the community improvement district and not for the purpose of providing those governmental services and facilities provided to the county or municipality as a whole.”

25. Creation and Administration CID must be authorized by local act of the General Assembly and is conditioned upon consent by: • the governing body of the municipality and/or county in which the proposed CID is located; • a majority of the non-residential real property owners within the proposed CID; and • the owners of at least 75% of the value of non-residential real property within the proposed CID. The local act must designate an “administrative body” to manage the CID: • the governing authority of the municipality or county involved; or • an administrative body with alternate membership, so long as the municipal or county governing authority is represented

26. Fiscal Authority of Administrative Body • May be authorized by the local act to levy taxes, fees, and assessments within the CID to fund governmental services and/or facilities, provided that: • such levies pertain only to nonresidential real property; • levy shall not exceed 2 1/2 percent of the assessed value of the real property; • levy shall be “equitably apportioned” among subject properties according to the need for governmental services and/or facilities created by the “degree of density of development of each such property”; and • any tax, fee, or assessment levied shall be collected by the county or municipality involved in the same manner as other taxes, fees, and assessments are levied by such county or municipality and transmitted to the CID’s administrative body. Local act may also authorize administrative body to incur debt, without referendum, backed by CID’s full faith, credit, and taxing power.

27. Examples County CIDs • Cumberland CID (Cobb) • Town Center CID (Cobb) • Highway 78 CID (Gwinnett) • Gwinnett Place CID (Gwinnett) • North Fulton CID (Fulton) • Perimeter Center CIDs (Fulton & DeKalb) Municipal CIDs • Downtown CID (Atlanta) • Midtown CID (Atlanta) • Buckhead CID (Atlanta) • Macon CID (Macon)

28. Tax Allocation Districts Authority Article IX, Section II, Paragraph VII(b) Redevelopment Powers Law (O.C.G.A. §36-44-1 et seq) Purpose To encourage the private redevelopment of “economically and socially depressed areas within counties and municipalities of this state” by capturing the incremental tax revenues gained from new private development within such an area and applying them – or the proceeds of tax allocation bonds secured by them – toward the funding of public infrastructure and/or private property improvements in the area.

29. Creation and Administration Conditions precedent to a city or county exercising powers conveyed by the Redevelopment Powers Law: • A local act of the General Assembly authorizing it must be passed; and • Provisions of local act must be approved by majority of city or county voters.

30. Steps in Creating a TAD • Identify the Redevelopment Area and tax parcel identification numbers. an urbanized area with dilapidated buildings, inadequate transportation facilities, or other characteristics that impair growth or an underutilized area with open lots, aging buildings, or environmental problems that retard development. • Prepare the Redevelopment Plan. blueprint for projects in the Redevelopment Area: proposed land uses, descriptions of projects, proposed redevelopment costs, sources of funding, and details of any proposed tax allocation bond issues. • Introduce local government resolution. a description of the Redevelopment Area, the effective date of TAD’s creation, the taxes to be pledged as security for tax allocation bonds, and designation of the Redevelopment Agent.

31. Steps in Creating a TAD (cont’d.) • Hold public hearing. at least one public hearing to discuss the Redevelopment Plan; the resolution must be adopted within 45 days of the public hearing. • Introduce and adopt resolutions of other governing bodies. overlapping jurisdictions must consent if their portions of ad valorem taxes levied in the TAD area will be used in computing the tax allocation increment. • Apply to State Revenue Commissioner for a determination of the base taxable value for the TAD. participating local governments continue to receive ad valorem tax revenue on this base value; all taxes collected on property values in excess of the base value are deposited into a special fund for payment of TAD redevelopment costs.

32. Tax Allocation Bonds • Secured by positive ad valorem tax increments. • May be additionally secured by any existing general fund revenues derived from within TAD. • Are not general obligation bonds. • 30-Year Term Limit. • Interest capitalization for up to 42 months • Federal and state income tax exemption • High-risk, high-yield securities

33. Tax Allocation Bonds (cont’d.) • Can provide a truly significant economic incentive for private property redevelopment. Example: $25,000,000 Project x 40% = $10,000,000 AV $10,000,000 AV x 40 mill = $400,000 per year $400,000 per year supports nearly $4,900,000 in 25-year, 6.50% tax increment bonds, or 19.5% of Project Cost

34. Legal and Administrative Issues • Referendum Requirement • Conflict with “Educational Purpose” Clause of State Constitution • Conflict with “Uniformity Provision” of State Constitution • Expansion of TAD boundaries • Using Local Option Sales Tax Increments as additional bond security • Communication with Local Tax Officials • Personal Property Taxes • Utility Property Taxes • Exempt Properties

35. Policy Issues • Conformity with Comprehensive Plan • Establishing Project Feasibility • Applying “but for” test • Protecting Public Investment/Structuring Public/Private Partnerships • Avoiding Usurpation of General Fund Revenues/Covering Cost of Public Service Provision • Use of TADs limited to 10% of total tax digest of initiating jurisdiction

36. Examples Westside TAD (Atlanta) Sandy Springs TAD (Fulton) Atlantic Station TAD (Atlanta) Ellenwood Town Center TAD (Clayton) Perry-Bolton TAD (Atlanta) Kensington Station/Memorial Drive TAD (DeKalb) Princeton Lakes TAD (Atlanta) Avondale Mall/Columbia Drive TAD (DeKalb) Eastside TAD (Atlanta) New Town Center TAD (Holly Springs) Beltline TAD (Atlanta) Camp Creek TAD (East Point) City Center South TAD (Marietta) Atlanta Rd Corridor TAD (Smyrna) Lakeside TAD (Acworth)

37. Enterprise Zones Authority Article IX, Section II, Paragraph VII(c) Enterprise Zone Employment Act of 1997 (O.C.G.A. §36-88-1 et seq) Purpose To encourage private businesses to reinvest and rehabilitate geographic areas within cities and counties suffering from disinvestment, underdevelopment and economic decline.

38. Creation and Administration Enterprise Zone area must meet at least four of five criteria: • Pervasive poverty (at least 20%) • Unemployment Rate at least 10% higher than State (or significant job dislocation) • Underdevelopment compared to rest of jurisdiction • General distress and adverse conditions (population decline, health and safety issues, etc.) • General blight evidenced by inclusion of any portion of area in an urban redevelopment area

39. Creation and Administration (cont’d.) Qualifying Business or Service Enterprise • Must create at least five or more full-time jobs • Must provide “economic stimulus” as determined by designating local government • When possible, 10% of new employees shall be low and moderate income individuals • Any entity constructing new, or rehabilitating exiting, housing where value of improvements exceeds 500% of land value

40. Available Incentives Ten-Year property tax exemption (not to exceed) • 100% for first five years • 80% for next two years • 60% for year eight • 40% for year nine • 20% for year ten • School Taxes and G.O. bond levies excluded • Enterprise must maintain a minimum of five jobs • Total exemptions granted to Enterprises limited to 10% of tax digest • Abatement or reduction in occupation taxes, regulatory fees, building inspection fees, etc. also available

41. Examples Fifty-two zones were reported to DCA for SFY 2003 in ten communities: • Atlanta • Augusta-Richmond • Carroll County and Carrollton • Cobb County • Columbus-Muscogee • DeKalb County • East Point • Milledgeville • Pine Mountain • Tifton

42. Conclusions • Enterprise Zones are relatively simple to implement and designed for areas already characterized by blight and poverty. • CIDs are more difficult to implement and designed for areas that are in danger of decline for lack of adequate public infrastructure of service levels. • TADs are the most difficult to implement and designed for areas where decline and/or underdevelopment is already evident, where private property improvements are most needed, and where significant incentives to make such improvements are required.