Several types of tax districts have been proposed to help fund the BeltLine – including a forthcoming Buckhead segment — and possibly the park proposed to be built over Ga. 400. The details of such tax districts can be confusing. The following is a guide to how various types work and what they can and cannot do, with descriptions from Georgia State University professor David Sjoquist, an expert in state and local taxation and urban and regional economics.
Community Improvement Districts
Community improvement districts consist of commercial property owners voluntarily signing on to be part of the CID and to pay taxes into it at a certain millage rate. They typically focus on transportation infrastructure projects, Sjoquist said.
CIDs were made legal by an amendment to the Georgia Constitution that was ratified in 1985. By law, CIDs cannot tax any residential owners or properties, including single-family homes, condos or apartments.
Community improvement districts are one of the most popular and well-known taxing districts, said Sjoquist.
There are 25 active CIDs throughout Georgia and metro Atlanta, including in Buckhead, downtown Atlanta and Perimeter Center.
The Buckhead CID’s tax rate is 3 mills and it brings in around $6 million in tax revenue each year, according to CID documents. The CID includes areas along Peachtree Road and Ga. 400. Its main borders are near Old Ivy, Roxboro, Peachtree and Roswell roads, but it also includes the Buckhead Village area and Lenox Square mall.
“CIDs fund largely additional services. You’re not increasing the property value, but it does make a place look nicer,” Sjoquist said.
The movement to allow CIDs in Georgia was started by a Cobb County developer seeking traffic improvements around Cumberland Mall.
“At the time, property owners relied on business owners’ associations to support needed improvements, but these organizations often did not raise enough funds to either directly fund projects or provide sufficient matching funds for state or federal grants,” a GSU study on CIDs said.
Special Improvement Districts
A bill in the Georgia General Assembly seeks to create a new type of improvement district that would function similarly to a CID, but would be able to tax commercial residential properties in addition to commercial properties. The legislation, House Bill 642, was created specifically to help fund the Atlanta BeltLine, an enormous project that is planned to include 33 miles of multi-use trails, a 22-mile streetcar route and 2,000 acres of parks. Some of those parks and two major segments of the multi-trails have been completed.
There currently are not any special improvement districts in Georgia, Sjoquist said.
The district would be for areas around the BeltLine and would have to be approved by at least 51 percent of the taxpayers in the proposed district proposed or of the taxpayers owning at least 75 percent of the assessed property value in the district, according to the legislation.
It would have an administrative board similar to CIDs and would have five to 13 members that are owners of the taxable properties in the district, the legislation says.
The legislation has also been discussed as a way to fund the park over Ga. 400, although officials behind that project say special taxes or raising taxes is not needed and is not currently being pursued as a way to fund the project, although that could change. The legislation would also have to be amended to be able to be used for the park.
Tax Allocation Districts
To use a TAD, a city or county first designates a specific geographic area that has the potential for redevelopment. A TAD is initially funded through debt, often bonds, and pays for public improvement projects. The property tax base value in the TAD area is frozen. Any increase in property value in that area due to the redevelopment is taxed and goes into the TAD to pay off that debt. The property tax revenue that is generated at the frozen property value goes to the entity that would normally collect it, Sjoquist said.
TADs are most often used to fund revitalization or redevelopment projects, Sjoquist said. When cities or counties use them, they gamble that the public improvements funded by the TAD will spur enough economic development to pay off the debt that originally funds a TAD, he said.
TADs carry several risks, including that not enough tax revenue could be generated to pay off the debt used to fund the TAD, Sjoquist said. They can also increase displacement of low- and moderate-income households if they increase property values in the area, he said.
Tax allocation districts, or TADs, have been used as the primary funding mechanism for the BeltLine so far. The BeltLine TAD takes some property tax revenue that would have gone to the city of Atlanta, Fulton County and APS.
The Great Recession in 2008 caused the BeltLine TAD funding to slow, but has bounced back, Sjoquist said.
“For a while things were kind of rocky, but now they are doing fine,” he said.
Special Services Districts
In a special services district, additional taxes are levied on property owners who benefit from specific county-provided services and pay a dedicated millage rate for those services, he said. For example, residents in unincorporated areas can be in a special district to fund county police services.
Special services districts are most often set up by a county to fund services in unincorporated areas that don’t have city services, Sjoquist said.
The idea of creating a special services district to help fund the park over Ga. 400 was floated in a concept draft study on the park, but has not moved forward so far.