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Legislature 2008: Reed, Weber want state referendum on tax use
By Paul Donsky
The Atlanta Journal-Constitution
Published on: 02/15/08
Two metro Atlanta state senators say they will file legislation next week calling for a statewide referendum in November that would allow cities and counties to tap school property taxes to help pay for redevelopment projects.
The bipartisan effort, pushed by state Sens. Kasim Reed (D-Atlanta) and Dan Weber (R-Dunwoody), follows a ruling this week by the Georgia Supreme Court banning the use of school tax money to help finance Atlanta's Beltline, a planned loop of transit, trails, parks and development around the city's core.
The court said a provision of the state constitution stipulates that school taxes can only be spent on education-related projects. Getting around that, the lawmakers say, requires a constitutional amendment.
Reed and Weber said they are working with Lt. Gov. Casey Cagle on their legislation.
Weber said he believes the legislation will pass. A two-thirds vote of both chambers of the Legislature is required for a constitutional amendment to reach the ballot.
"There's broad bipartisan support for what we're trying to accomplish here," Weber said.
The lawmakers hope to salvage a popular financing mechanism among cities and counties known as a tax allocation district, or TAD, used to spur development in a specific area, such as a run-down section of town.
A TAD diverts from local governments and school systems any future increases in property tax revenue in a specified area. Instead, those funds are used to help offset the cost of redevelopment. After 25 or 30 years, the tax flow is restored.
In recent years, TADs have been used to develop projects like Atlantic Station, which transformed a closed steel mill in Midtown into a mixed-use village with new housing, offices, shops and restaurants.
Schools account for the bulk of property taxes in most jurisdictions. The court ruling effectively cut in half the amount of tax dollars available for TAD redevelopment efforts.
The Legislature created TADs in 1985 and specified that school tax money could be used for redevelopment projects. That law was not challenged until 2006 in the Beltline lawsuit that led to Monday's ruling.
Dozens of projects across the state are now at risk, said Weber, such as Smyrna's plan to overhaul two aging shopping centers, and Gwinnett County's attempt to redevelop a closed fiber-optics plant. The developer of the Gwinnett project said this week his project is on hold because of the court ruling.
"These are efforts from local governments to try and make improvements, and we need to support that," Weber said.
In a news release Thursday, Cagle said the court decision "has threatened a critical infrastructure and economic development tool for Georgia and we must act and develop a solution."
The tough talk came as good news to developers like Edens & Avant, which has been working for the past six years to build a housing and retail complex in a depressed section of northwest Atlanta. Without the school tax money, the project can't go forward, said company vice president Lyle Darnall.
"I'm thrilled about it," Darnall said of the possible legislative action. "We'll be watching closely, and I hope it works."
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Funny, that same day was the Tree Huggers Ball which was a lot of fun as always.
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