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Nov. 2—Summarizing what a "tax allocation district" (TAD) is in one paragraph — let alone a single sentence — is no easy task.
"The Georgia Redevelopment Powers Law gives governments the right to look at designated geographic areas that have a potential for redevelopment," stated city of Dalton Chief Financial Officer Cindy Jackson. "You have to prove, basically, that they are either socially or economically distressed or blighted."
Today, Jackson said there are four active TADs within the jurisdiction of the city government.
"We take the parcels that are in that TAD and we have a base year that we freeze the value," she described the mechanics. "So any incremental growth in the value of that TAD area, we can actually use those funds for TAD agreements."
The aforementioned state law, she said, does give local governments the ability to issue bonds for TAD projects.
"But we don't do that, we do a pay-as-you-go," Jackson said. "So any deal that the city of Dalton does, it's only going to be based on the growth for that year or subsequent years."
Three out of the four existing TADs, she said, come with development agreements.
"When we write these agreements with these developers, test No. 1 is that year, you have to have incremental growth within that TAD area," she said. "And plus, their parcels have to have incremental growth — so if those two tests aren't met, then they don't get any of the payment."
The longest such developer agreement, Jackson said, covers a 20-year term.
Dalton City Administrator Andrew Parker said TADs are more or less tools for economic development.
"The taxing authorities that would be affected by the eligible project all have to decide whether or not they're going to commit their portion of their increment toward the project," he said. "The state law tells us that we have to satisfy what's called a 'but-for test' — and that is would this project occur, would this redevelopment project occur, without the assistance of the TAD?"
Parker said a TAD policy committee appointed by the mayor and council — comprised of various taxing authority stakeholders and appointees — review each project on an individual basis to determine if the proposal does indeed satisfy the test requirements.
"These TADS may not work for every project, this is not a one-size-fits-all solution to economic development," he said. "It needs to be a case-by-case review of the project that is proposed or the improvements that are proposed to determine whether or not this particular tool is the best for the project that's being proposed."
Since 2015, five TADS have been established within the city of Dalton.
The first TAD, encompassing the downtown Dalton area, includes 521 different parcels.
"We do have a development agreement with The Carpentry," Jackson said. "It is the boutique hotel."
The second TAD was ultimately dissolved.
"Because it represented a smaller geographical area and the area expanded," Parker said. "It's the same geographical area, the boundaries were just amended ... so technically, there is no longer a TAD No. 2."
TAD 3 covers East Walnut Avenue.
"Out towards the mall, that area," Jackson said. "There are 94 parcels there and we do have a developer agreement that began in 2018 with Dalton Mall."
TAD 4 is near the north bypass, comprising 16 parcels along Hammond Creek.
Jackson said the developer agreement there started in 2022.
"That is the multifamily housing project that is going vertical as we speak," Parker said.
TAD 5 covers West Walnut Avenue.
"In the Market Street area," Jackson said. "There are 79 parcels there and we do not have an agreement in that TAD area."
Tax allocation districts aren't exactly a new phenomenon. Indeed, local governments have had the ability to create them since the 1980s.
"Anytime there's a new tool available, I think local governments are risk-averse and they want to see how this has worked in other communities," Parker said. "What I would say for the city of Dalton is the elected officials and the key stakeholders wanted to see how these projects have worked from a mechanic standpoint in other communities and whether they worked well or not — and what the lessons learned were."
Parker said the state TAD law is fairly broad in terms of how proceeds can be used.
"When we meet with the TAD policy committee to review these applications, we've got to feel like we've met the eligibility uses," he said. "Whether that's to help fund capital costs for the project or to help provide public infrastructure that would support redevelopment."
Parker said there are "multiple angles" to consider when determining whether or not a certain area is suited for a TAD designation.
"From a city maintenance and operation government point of view, what we have to look at is the risk associated with the TAD," he said. "Which would be the cost to provide the services and that's one of the things that we're really attuned to is if any particular project is approved, what are the demands that are going to be placed on the city government ... whether that be public safety, public infrastructure, and can we overcome those concerns in terms of the long-term gain?"
Parker said it's apparent that developers are hesitant to invest in certain areas without some assistance.
"If this property continues to sit blighted or vacant or whatever, we've got to weigh the fact that we're going to be stuck with this potentially static tax revenue and other parts of town are, essentially, having to subsidize the cost of service to those areas," he said, "versus can we potentially consider one of these agreements that would provide for reinvestment and provide a project that we would want to see and the quality of project that we would want to see?"
Compared to other communities in Northwest Georgia, Parker said Whitfield County's population growth has been relatively flat.
"Hopefully, these projects will provide places for people to live — which is definitely one of the eligible uses as defined in the redevelopment powers act — but to also spur the local economy," he continued. "Through increase in retail sales and jobs ... we're checking a lot of boxes by being able to use this tool in the right circumstance."
With the TADs in place, Parker said the local taxing authorities continue to collect the taxes they've always earned from the properties.
"In terms of straight tax revenue, there's no decrease," he said.
Jackson used TAD No. 3 to illustrate the point.
"In your base year, that is the year that you basically cap it," she said. "So we continue to get the revenues based off the assessed value ... in that TAD area, the assessed value was $52.9 million."
Since that base year, Jackson said no incremental growth was charted until last year.
"The parcels at the mall did not grow so they did not get any of that incremental growth," she said. "So we had incremental growth from our base year for 2023 of $1.2 million that we all got the tax revenue off of."
Parker notes that the deals can be customized if the projects would require local governments to spend more money on things like public safety and public infrastructure concerns.
"In the county, for example, I know they were evaluating a deal that would have provided some new revenue to the school system to offset the cost of providing the education to the students," he said. "We have not had to do that yet in Dalton, but that's certainly something that you can evaluate as these agreements are proposed."
At this point, Parker said there are no plans for a sixth TAD within the city of Dalton.
"There are prospective projects within the existing TAD districts that are in the due diligence phase," he said. "They're not anything where land has been purchased or anything like that, it's just developers trying to understand whether or not it will be an eligible project ... in many of the circumstances where that occurs, we have to give them some tough answers."
Jackson said applicant fees for developers vary.
"If it's 15 acres or less, it is $10,000," she said. "If it's over 15 acres, it's $15,000."
Parker said that the city government does want to hit the pause button on TAD designations for multifamily housing.
"We've got about 900 new units coming online, one has been a TAD project, others have not been," he said. "What I would say that we're open to is more single-family ownership, whether that be condominiums or detached single-family homes, I still think there would be interest in that."
Considering the lack of land within the city itself, Parker said redevelopment would be likely for any new subdivision or townhome projects to be viable.
"In the downtown district, I think there would still be a willingness to consider multifamily projects to provide loft living," he said. "We've received a lot of good information from various departments like the Department of Community Affairs and others ... there's a desire to try to build housing where people work, so their commutes are limited and you don't have the urban sprawl effect where you're building these major places for housing away from where people work."
The city, he said, would also be interested in "any kind of huge sales tax generator" — especially ones that would create a significant amount of new jobs in the community.
"2022 was the first year in our history where sales tax receipts eclipsed property tax receipts," Parker said. "We have a lot of folks from outside the community coming into the community to work and they buy their groceries here, they shop at different retail stores here ... and that's allowed us to keep the tax burden low on our property owners that we serve."